Insulin replacement therapy in type 1 diabetes is imperfect because proper glycemic control is not always achieved. Most patients develop microvascular, macrovascular, and neurological complications, which increase with the degree of hyperglycemia. Engineered muscle cells continuously secreting basal levels of insulin might be used to improve the efficacy of insulin treatment. Here we examined the control of glucose homeostasis in healthy and diabetic transgenic mice constitutively expressing mature human insulin in skeletal muscle. Fed transgenic mice were normoglycemic and normoinsulinemic and, after an intraperitoneal glucose tolerance test, showed increased glucose disposal. When treated with streptozotocin (STZ), transgenic mice showed increased insulinemia and reduced hyperglycemia when fed and normoglycemia and normoinsulinemia when fasted. Injection of low doses of soluble insulin restored normoglycemia in fed STZ-treated transgenic mice, while STZ-treated controls remained highly hyperglycemic, indicating that diabetic transgenic mice were more sensitive to the hypoglycemic effects of insulin. Furthermore, STZ-treated transgenic mice presented normalization of both skeletal muscle and liver glucose metabolism. These results indicate that skeletal muscle may be a key target tissue for insulin production and suggest that muscle cells secreting basal levels of insulin, in conjunction with insulin therapy, may permit tight regulation of glycemia.