Pancreatic islets are highly vascularized with an extensive endothelial cell (EC) network that is important for islet function. Vascular endothelial growth factor A (VEGF-A) produced by islet endocrine cells is the principal regulator of islet vascular development and vascular homeostasis. Inactivation of VEGF-A, either in endocrine or β cell progenitors leads to a profound loss of intra-islet capillaries and reduced β cell mass and function. Likewise, β cell and islet development is dependent on critical, but undefined, signals emanating from nearby ECs, indicating cross-talk between β cells and ECs. While testing the hypothesis that increased EC signaling or mass would increase β cell mass using a model system of inducible VEGF-A164 overexpression, we unexpectedly found that increased VEGF-A led not to increased β cell mass, but to reduced, β cell mass. Even more surprising was the discovery that withdrawal of the VEGF-A stimulus was followed by robust β cell proliferation, leading to islet regeneration, normalization of β cell mass, and reestablishment of the intra-islet capillary network. Using islet transplantation and bone marrow (BM) transplantation approaches, we found that β cell proliferation was dependent on the local microenvironment of ECs, β cells, and BM-derived macrophages recruited to the islets upon VEGF-A induction. This microenvironment also promoted human β cell proliferation. This presentation will discuss these data and ways that this information may be useful to promote β cell restoration in type 1 and type 2 diabetes.