Diabetes is a major public health issue because of its widely epidemic nature and lack of cure. Here, we show that pancreas-derived mesenchymal stem cells (PMSCs) are capable of regenerating exocrine pancreas when implanted into the kidney capsule of mice with streptozotocin (STZ)–induced diabetes. Mechanistically, we found that the regenerated exocrine pancreas elevated interleukin-6 (IL-6) in PMSC implants, which transiently activated tumor necrosis factor–α (TNF-α) and interferon-γ (IFN-γ) to inhibit IL-17, thereby rescuing damaged exocrine pancreas and islet β cells. In addition, we used knockout mouse models to show that global lack of IL-6, TNF-α, or IFN-γ resulted in increased severity of STZ-induced diabetes and resistance to PMSC implantation therapy, confirming the roles of these factors in safeguarding pancreatic β cells. Furthermore, removal of the kidney capsule PMSC implants at 28 days after implantation did not affect the PMSC-initiated therapeutic effect on diabetic mice. This study reveals a previously unknown role of exocrine pancreas regeneration in safeguarding β cells and demonstrates a “soil-rescues-seed” strategy for type 1 diabetes therapy.