CD4(+)CD25(+)Foxp3(+) regulatory T cells (T regs) are important for preventing autoimmune diabetes and are either thymic-derived (natural) or differentiated in the periphery outside the thymus (induced). Here we show that beta-cell peptide-pulsed dendritic cells (DCs) from nonobese diabetic (NOD) mice can effectively induce CD4(+)CD25(+)Foxp3(+) T cells from naïve islet-specific CD4(+)CD25(-) T cells in the presence of TGF-beta1. These induced, antigen-specific T regs maintain high levels of clonotype-specific T cell receptor expression and exert islet-specific suppression in vitro. When cotransferred with diabetogenic cells into NOD scid recipients, T regs induced with DCs and TGF-beta1 prevent the development of diabetes. Furthermore, in overtly NOD mice, these cells are able to significantly protect syngeneic islet grafts from established destructive autoimmunity. These results indicate a role for DCs in the induction of antigen-specific CD4(+)CD25(+)Foxp3(+) T cells that can inhibit fully developed autoimmunity in a nonlymphopoenic host, providing an important potential strategy for immunotherapy in patients with autoimmune diabetes.