Vasoactive intestinal peptide (VIP) is a potent anti-inflammatory agent with immunoregulatory properties, skewing the immune response to a Th2 pattern of cytokine production. Here, we studied the effect of treatment with VIP in the development of diabetes in nonobese diabetic (NOD) mice, an animal model of type 1 diabetes. Mice treated with VIP from 4 weeks of age did not develop diabetes and showed milder insulitis than nontreated mice. The protective mechanism of VIP was associated with a reduction in the circulating levels of Th1 cytokines. In the pancreas of VIP-treated animals, regulatory T cell markers predominate, as indicated by the upregulation of FoxP3 and transforming growth factor-beta (TGF-beta), and the downregulation of the transcription factor, T-bet. These findings indicate that VIP restores tolerance to pancreatic islets by promoting the local differentiation and function of regulatory T cells.