Animal donors such as pigs could provide an alternative source of organs for transplantation. However, the promise of xenotransplantation is offset by the possible public health risk of a cross-species infection. All pigs contain several copies of porcine endogenous retroviruses (PERV), and at least three variants of PERV can infect human cell lines in vitro in co-culture, infectivity and pseudotyping experiments. Thus, if xenotransplantation of pig tissues results in PERV viral replication, there is a risk of spreading and adaptation of this retrovirus to the human host. C-type retroviruses related to PERV are associated with malignancies of haematopoietic lineage cells in their natural hosts. Here we show that pig pancreatic islets produce PERV and can infect human cells in culture. After transplantation into NOD/SCID (non-obese diabetic, severe combined immunodeficiency) mice, we detect ongoing viral expression and several tissue compartments become infected. This is the first evidence that PERV is transcriptionally active and infectious cross-species in vivo after transplantation of pig tissues. These results show that a concern for PERV infection risk associated with pig islet xenotransplantation in immunosuppressed human patients may be justified.