Overexpression of the X-linked inhibitor of apoptosis (XIAP) prevents islet allograft rejection. We constructed an adeno-associated virus expressing XIAP driven by the rat insulin promoter (dsAAV8-RIP-XIAP) for long-term beta-cell gene expression in vivo. Pancreatic delivery of dsAAV8-RIP-XIAP prevented autoimmune diabetes in 70% of non-obese diabetic (NOD) mice, associated with decreased insulitis. Islets from Balb/c mice transduced with dsAAV8-RIP-XIAP were protected following transplantation into streptozotocin (STZ)-diabetic Bl/6 recipients, associated with decreased graft infiltration. Interestingly, dsAAV8-RIP-XIAP transduction induced expression of lactate dehydrogenase (LDHA) and monocarboxylate transporter 1 (MCT1), two genes normally suppressed in beta cells and involved in production and release of lactate, a metabolite known to suppress local immune responses. Transduction of Balb/c islets with AAV8-RIP-LDHA-MCT1 tended to prolong allograft survival following transplant into STZ-diabetic Bl/6 recipients. These findings suggest that XIAP has therapeutic potential in autoimmune diabetes and raise the possibility that local lactate production may play a role in XIAP-mediated immunomodulation.