There is a growing body of evidence to suggest that the autoimmunity observed in type 1 diabetes mellitus (T1DM) is the result of an imbalance between autoaggressive and regulatory cell subsets. Therapeutics that supplement or enhance the existing regulatory subset are therefore a much sought after goal in this indication. Here, we report the results of a double blind, placebo controlled, phase I clinical trial of a novel antigen-specific therapeutic in 12 subjects with recently diagnosed T1DM. Our primary objective was to test its safety. The study drug, human insulin B-chain in incomplete Freund's adjuvant (IFA) was administered as a single intramuscular injection, with subjects followed for 2 years. All subjects completed therapy and all follow-up visits. The therapy was generally safe and well-tolerated. Mixed meal stimulated C-peptide responses, measured every 6 months, showed no statistical differences between arms. All patients vaccinated with the autoantigen, but none who received placebo, developed robust insulin-specific humoral and T cell responses. Up to two years following the single injection, in peripheral blood from subjects in the experimental arm, but not the control arm, insulin B-chain-specific CD4+ T cells could be isolated and cloned that showed phenotypic and functional characteristics of regulatory T cells. The induction of a lasting, robust immune response generating autoantigen-specific regulatory T cells provides strong justification for further testing of this therapy in type 1 diabetes. (clinicaltrials.gov identifier NCT00057499).