OBJECTIVE Streptozotocin (STZ) is the most widely used diabetogenic agent in animal models of islet transplantation. However, the immunomodifying effects of STZ and the ensuing hyperglycemia on lymphocyte subsets, particularly on T regulatory cells (Tregs), remain poorly understood. RESEARCH DESIGN AND METHODS This study evaluated how STZ-induced diabetes affects adaptive immunity and the consequences thereof on allograft rejection in murine models of islet and skin transplantation. The respective toxicity of STZ and hyperglycemia on lymphocyte subsets was tested in vitro. The effect of hyperglycemia was assessed independently of STZ in vivo by the removal of transplanted syngeneic islets, using an insulin pump, and with rat insulin promoter diphtheria toxin receptor transgenic mice. RESULTS Early lymphopenia in both blood and spleen was demonstrated after STZ administration. Direct toxicity of STZ on lymphocytes, particularly on CD8(+) cells and B cells, was shown in vitro. Hyperglycemia also correlated with blood and spleen lymphopenia in vivo but was not lymphotoxic in vitro. Independently of hyperglycemia, STZ led to a relative increase of Tregs in vivo, with the latter retaining their suppressive capacity in vitro. The higher frequency of Tregs was associated with Treg proliferation in the blood, but not in the spleen, and higher blood levels of transforming growth factor-β. Finally, STZ administration delayed islet and skin allograft rejection compared with naive mice. CONCLUSIONS These data highlight the direct and indirect immunosuppressive effects of STZ and acute hyperglycemia, respectively. Thus, these results have important implications for the future development of tolerance-based protocols and their translation from the laboratory to the clinic.