We report a case of severe hypoglycemia occurring in a 35-yr-old woman, 6 yr after pancreas transplantation for type 1 diabetes mellitus. Extensive preoperative and intraoperative exploration failed to disclose the presence of a focal adenomatous lesion. Partial allograft pancreatectomy was performed initially, but it failed to control the hypoglycemic symptoms, leading to complete removal of the pancreas allograft. Histopathological examination of the resected pancreas allograft showed the presence of nesidioblastosis, characterized by foci of islet cells budding off ducts, accompanied by an increase in the number of islets, numerous small intralobular islet cell aggregates, and nesidiodysplasia (large, hyperchromatic islet cell nuclei). Islet neogenesis-associated protein-positive islets and ducts were seen by immunofluorescence. Insulin-positive islets ranged from very small to large, with isolated insulin-positive cells diffusely scattered, consistent with islet neogenesis. Very little glucagon staining was identified. Reported cases of adult nesidioblastosis are reviewed. The significance of nesidioblastosis in the context of pancreas transplantation and possible mechanisms of posttransplant hypoglycemia are discussed.