The present invention relates to methods of treating diabetes in a human subject comprising the use of pancreatic islets or of embryonic pancreatic tissue of a transgenic animal, wherein said transgenic animal contains a polynucleotide sequence encoding a CTLA4 peptide-immunoglobulin fusion, preferably LEA29Y, and expresses said CTLA4 peptide-immunoglobulin fusion in a tissue-specific manner in pancreatic islets.