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.