Nonobese diabetic (NOD) mice serve as a model of spontaneous type 1 diabetes (T1D), a T cell-mediated autoimmune disease leading to the destruction of pancreatic insulin-producing beta islet cells. A possible deficiency in regulatory T (T(reg)) cell development or function may promote the activation, expansion, and recruitment of autoreactive T cells and the onset of T1D. Naturally occurring CD4(+)CD25(+) T(reg) (nT(reg)) cells, which typically display potent inhibitory effects on T cell functions in vitro and in vivo, may be defective at controlling autoimmunity in T1D. We have examined the relative contribution of CD4(+)CD25(+) nT(reg) cells in the immune regulation of T1D in the NOD mouse model. CD4(+)CD25(+) T cells represent 5-10% of CD4(+) thymocytes or peripheral T cells from prediabetic neonatal NOD mice, are anergic to TCR signals, and potently suppress activated T cells in a contact-dependent and cytokine-independent fashion in vitro. Unlike total CD4(+) T cells, prediabetic CD25(+)-depleted CD4(+) T cells are potently diabetogenic when transferred in immunodeficient NOD mice. Co-transfer of CD4(+)CD25(+) T cells from thymocytes or peripheral lymphoid tissues of neonatal NOD mice dramatically halts disease development and beta-islet cell lymphocytic infiltration, even when T1D is induced by CD4(+) T cells from BDC2.5 transgenic or diabetic NOD mice. Finally, we show that CD4(+)CD25(+) T(reg) preferentially accumulate in inflamed pancreatic environments, where they potently inhibit the antigen-specific expansion and cytokine effector functions of diabetogenic T cells. Thus, CD4(+)CD25(+) T cell-mediated regulation is operative in the prediabetic neonatal T cell repertoire and can suppress the diabetogenic process and control the onset of T1D.