Islet allotransplantation can provide insulin independence in selected individuals with type 1 diabetes. The long-term effects of these transplants on the liver are unknown. Recently, two cases of periportal steatosis after islet transplantation have been described. In this study, we performed ultrasound and magnetic resonance imaging (MRI) in 30 C-peptide−positive islet transplant recipients to detect steatosis and to explore the association of the radiological findings with clinical and metabolic factors. Steatosis was observed on MRI in six (20%) subjects. Histological findings of hepatic steatosis concurred with the imaging findings. Steatosis completely resolved in one subject whose graft failed. More subjects with steatosis required supplementary exogenous insulin than not (67 vs. 21%; P < 0.05). The clinical features of subjects with and without steatosis were otherwise similar, although C-peptide levels were higher in insulin-independent subjects with steatosis (0.98 ± 0.12 vs. 0.70 ± 0.18 nmol/l; P = 0.05), despite similar blood glucose levels. Serum triglycerides and the use of exogenous insulin were associated with increased odds of steatosis in a logistic regression model (χ² [degrees freedom] = 13.6 [2]); P = 0.001). MRI-detected steatosis is a common finding; the steatosis appears to be due to a paracrine action of insulin secreted from intrahepatic islets. Hepatic steatosis may be associated with insulin resistance or graft dysfunction.