Th1 cell activation and cytokine production shift the balance between Th1 and Th2, favoring the up-regulation of proinflammatory activity that leads to destruction of insulin-producing pancreatic beta cells in type 1 diabetes. Th2-type cytokines, such as IL-10, have immune regulatory function. Administration of IL-10, or IL-10 gene transfer, prevents autoimmune diabetes in nonobese diabetic (NOD) mice. However, constant administration of purified rIL-10 is not practical for long-term therapy to prevent diabetes. In this study, we transferred the BCRF-1 gene, an open reading frame in the Epstein-Barr viral genome with remarkable homology to mouse IL-10 (viral IL-10 or vIL-10), by an adeno-associated viral (AAV) vector to NOD mice to attain sustained vIL-10 gene expression. Like endogenous mouse IL-10, vIL-10 has potent immunoregulatory and immunosuppressive functions, but can be specifically distinguished from endogenous mouse IL-10 for monitoring of the transgene expression. A single systemic administration of AAV vIL-10 significantly reduced insulitis and prevented diabetes development in NOD mice. This protective effect correlated with sustained transgene expression and protein production. Moreover, splenocytes from the treated mice blocked diabetes transfer to NOD recipients, suggesting that vIL-10 induces an active suppression of autoimmunity. This study provides evidence to support the possibility of using vIL-10 gene therapy to prevent type 1 diabetes.