Diabetes is associated with defective beta cell function and altered beta cell mass. The mechanisms regulating beta cell mass and its adaptation to insulin resistance are unknown. It is unclear whether compensatory beta cell hyperplasia is achieved via proliferation of existing beta cells or neogenesis from progenitor cells embedded in duct epithelia. We have used transgenic mice expressing a mutant form of the forkhead-O1 transcription factor (FoxO1) in both pancreatic ductal and endocrine beta cells to assess the contribution of these 2 compartments to islet expansion. We show that the mutant FoxO1 transgene prevents beta cell replication in 2 models of beta cell hyperplasia, 1 due to peripheral insulin resistance (Insulin receptor transgenic knockouts) and 1 due to ectopic local expression of IGF2 (Elastase-IGF2 transgenics), without affecting insulin secretion. In contrast, we failed to detect a specific effect of the FoxO1 transgene on the number of periductal beta cells. We propose that beta cell compensation to insulin resistance is a proliferative response of existing beta cells to growth factor signaling and requires FoxO1 nuclear exclusion.