Accumulating evidence supports a role for viruses in the pathogenesis of type 1 diabetes mellitus (T1DM). Activation of dsRNA-sensing pathways by viral dsRNA induces the production of inflammatory cytokines and chemokines that trigger beta cell apoptosis, insulitis, and autoimmune-mediated beta cell destruction. This study was designed to evaluate and describe potential protective effects of phenylmethimazole (C10), a small molecule which blocks dsRNA-mediated signaling, on preventing dsRNA activation of beta cell apoptosis and the inflammatory pathways important in the pathogenesis of T1DM. We first investigated the biological effects of C10, on dsRNA-treated pancreatic beta cells in culture. Cell viability assays, quantitative real-time PCR, and ELISAs were utilized to evaluate the effects of C10 on dsRNA-induced beta cell cytotoxicity and cytokine/chemokine production in murine pancreatic beta cells in culture. We found that C10 significantly impairs dsRNA-induced beta cell cytotoxicity and up-regulation of cytokines and chemokines involved in the pathogenesis of T1DM, which prompted us to evaluate C10 effects on viral acceleration of T1DM in NOD mice. C10 significantly inhibited viral acceleration of T1DM in NOD mice. These findings demonstrate that C10 (1) possesses novel beta cell protective activity which may have potential clinical relevance in T1DM and (2) may be a useful tool in achieving a better understanding of the role that dsRNA-mediated responses play in the pathogenesis of T1DM.