The association between insulin-dependent diabetes mellitus (IDDM) and an allele of a restriction fragment length polymorphism (RFLP) 5′ to the coding region of the insulin gene has raised the possibility that variation in the vicinity of the insulin gene confers susceptibility to IDDM. To test this hypothesis, the distribution of insulin gene sharing in affected sib pairs (ASPs) from the Genetic Analysis Workshop 5 (GAW5) families has been compared with that expected on the basis of random assortment. There is no deviation from random expectation in insulin gene sharing among 95 ASPs from families fully informative for the insulin gene. This is also true when insulin gene sharing is conditioned on HLA sharing, on the particular HLA DR types in ASPs, or on the parents' insulin allele classes. These results thus provide no evidence that variation at or near the insulin gene confers susceptibility to IDDM. However, we also used computer simulation to investigate how the insulin gene region could contribute susceptibility to IDDM without yielding evidence for distortion in insulin gene sharing in a sample comparable to that of GAW5. We found that various levels of insulin gene involvement in IDDM could generate a population association between the insulin gene RFLP and IDDM comparable to that reported in the literature, without producing significant distortion in insulin gene sharing of ASPs.