We describe a novel TCR-transgenic mouse line, TCR7, where MHC class II-restricted, CD4+ T cells are specific for the subdominant H-2b epitope (HEL74-88) of hen egg lysozyme (HEL), and displayed an increased frequency in the thymus and in peripheral lymphoid compartments over that seen in non-transgenic littermate controls. CD4+ T cells responded vigorously to HEL or HEL74-88 epitope presented on APC and could develop into Th1 or Th2 cells under appropriate conditions. Adoptive transfer of TCR7 Ly5.1 T cells into Ly5.2 rat insulin promoter (RIP)-HEL transgenic recipient hosts did not lead to expansion of these cells or result in islet infiltration, although these TCR7 cells could expand upon transfer into mice expressing high levels of HEL in the serum. Islet cell infiltration only occurred when the TCR7 cells had been polarized to either a Th1 or Th2 phenotype prior to transfer, which led to insulitis. Progression from insulitis to autoimmune diabetes only occurred in these recipients when Th1 but not Th2 TCR7 cells were transferred and CTLA-4 signaling was simultaneously blocked. These findings show that regulatory pathways such as CTLA-4 can hold in check already differentiated autoreactive effector Th1 cells, to inhibit the transition from tolerance to autoimmune diabetes.