Abstract Aims Metformin, rosiglitazone and sulfonylureas enhance either insulin action or secretion and thus have been used extensively as early stage anti-diabetic medication, independently of the aetiology of the disease. When administered to newly diagnosed diabetes patients, these drugs produce variable results. Here, we examined the effects of the three early stage oral hypoglycaemic agents in mice with diabetes induced by multiple low doses of streptozotocin, focusing specifically on the developmental biology of pancreatic islets. Methods Streptozotocin-treated diabetic mice expressing a fluorescent reporter specifically in pancreatic islet α-cells were administered the biguanide metformin (100 mg/kg), thiazolidinedione rosiglitazone (10 mg/kg), or sulfonylurea tolbutamide (20 mg/kg) for 10 days. We assessed the impact of the treatment on metabolic status of the animals as well as on the morphology, proliferative potential and transdifferentiation of pancreatic islet cells, using immunofluorescence. Results The effect of the therapy on the islet cells varied depending on the drug and included enhanced pancreatic islet β-cell proliferation, in case of metformin and rosiglitazone; de-differentiation of α-cells and β-cell apoptosis with tolbutamide; increased relative number of β-cells and bi-hormonal insulin + glucagon + cells with metformin. These effects were accompanied by normalisation of food and fluid intake with only minor effects on glycaemia at the low doses of the agents employed. Conclusions Our data suggest that metformin and rosiglitazone attenuate the depletion of the β-cell pool in the streptozotocin-induced diabetes, whereas tolbutamide exacerbates the β-cell apoptosis, but is likely to protect β-cells from chronic hyperglycaemia by directly elevating insulin secretion.