IMT504 is an oligonucleotide that promotes tissue repair in bone injury and neuropathic pain models by stimulating progenitor cells. Here we evaluated the effect of IMT504 on the recovery of islet function in a streptozotocin (STZ)-induced model of diabetes in the rat. Male Sprague–Dawley rats were injected with STZ (60 mg/kg, i.p., day 1) or citrate buffer (Control). Animals with glycaemia between 11 and 20 mmol/l on day 4 were injected with IMT504 (4 mg/animal in saline, s.c., STZ-IMT504) or with saline (STZ-Saline) for 10 days. Glycaemia and water and food intake were recorded for 33 days. Intraperitoneal glucose tolerance tests (IPGTTs) were performed on day 30. On day 35, overnight-fasted animals were killed and blood samples and pancreases collected for hormonal and histological studies. A second group of STZ-IMT504 rats was killed, together with Control and STZ-Saline rats, after two consecutive days of blood glucose decreases after the beginning of IMT504 treatment. Pancreases were collected and proliferating cell nuclear antigen (PCNA), nestin and neurogenin 3 (NGN3) detected by immunohistochemistry. IMT504 greatly improved blood glucose and food and water intakes in STZ-IMT504 rats by day 8, as well as IPGTTs on day 30. Significant increases in islet number and beta cell content were observed in STZ-IMT504 rats (day 33). Furthermore, after two to five IMT504 injections, blood glucose decreased, and an increase in pancreatic nestin (mainly in endothelial cells), PCNA and NGN3 production (in islets) was observed in STZ-IMT504 rats. IMT504 induced a marked recovery of STZ-induced diabetes that correlated with early production of progenitor cell markers, such as nestin and NGN3.