To learn more about nonimmune-mediated islet graft failure, we transplanted different preparations (preps) of isolated human islets under the kidney capsule of streptozotocin (STZ)-diabetic nude mice. One month after the implantation of 1,000 or 2,000 islets, grafts were harvested for morphological, immunohistochemical, and ultrastructural analysis. Only a single islet prep cured the diabetes out of all the recipients, while the remaining preps showed only partial function after the implantation of 2,000 islets. Transplanted mice showed high circulating proinsulin levels but, with the exclusion of those bearing curative grafts, relatively low mature insulin levels. Engrafted β-cells showed positive carboxypeptidase E (CPE) and prohormone convertase 1 (PC1) staining, while prohormone convertase 2 (PC2) was undetectable. In contrast, PC2 was abundantly expressed by engrafted α-cells. Moreover, engrafted β-cells did not show evidence of replication, and preapoptotic β-cells, with intra- and extracellular amyloid deposition, were detected with electron microscopy. Cell cycle inhibitors p16^INK4, p21^WAF1, and p27^Kip1 were abundantly expressed in the islet grafts and showed a predominant nuclear localization. In conclusion, diabetic nude mice transplanted with human islets showed disproportionate hyperproinsulinemia and graft evidence of β-cell restricted PC2 depletion, amyloid deposition and β-cell death, and lack of β-cell replication with nuclear translocation of p27^Kip1 and p21^WAF1 that together may contribute to delayed graft failure.