The relationship between T-lymphocyte activation and residual beta-cell function was studied in 19 newly diagnosed Type I (insulin dependent) diabetic patients, aged 6-43 years, 7-10 days after beginning insulin therapy and once normoglycemia had been achieved. Residual beta-cell function was studied by measurement of plasma C-peptide concentration 6 minutes after intravenous glucagon administration. T-lymphocyte activation markers, HLA-DR/CD3 and interleukin-2 receptor (Tac) expression, were measured in peripheral blood mononuclear cells by dual- or single-colour flow cytometry. Six patients showed increased percentages of activated T lymphocytes (increased HLA-DR positivity in four patients, and an excess of Tac-positive cells in two). The mean percentage of activated T lymphocytes was higher in patients with stimulated C-peptide levels below 300 pmol/l (8.32±1.32%) than in those with plasma stimulated C-peptide above 300 pmol/l (3.93±0.49%), P<0.01, or controls (3.48±0.60%), P<0.01. Furthermore, the six patients with increased percentages of activated T lymphocytes were in the low stimulated C-peptide group. A negative correlation was found between the percentage of activated T lymphocytes and glucagon-stimulated C-peptide (r=-0.5877, P<0.01). We conclude that increased T-lymphocyte activation is associated with a higher impairment of beta-cell function at the onset of Type I diabetes mellitus. © 1990 Academic Press Limited.