Lysosomal proteases generate peptides presented by class II MHC molecules to CD4+ T cells. To determine whether specific lysosomal proteases might influence the outcome of a CD4+ T cell-dependent autoimmune response, we generated mice that lack cathepsin L (Cat L) on the autoimmune diabetes-prone NOD inbred background. The absence of Cat L affords strong protection from disease at the stage of pancreatic infiltration. The numbers of I-A(g7)-restricted CD4+ T cells are diminished in Cat L-deficient mice, although a potentially diabetogenic T cell repertoire persists. Within the CD4+ T cell compartments of Cat L-deficient mice, there is an increased proportion of regulatory T cells compared with that in Cat L-sufficient littermates. We suggest that it is this displaced balance of regulatory versus aggressive CD4+ T cells that protects Cat L-deficient mice from autoimmune disease. Our results identify Cat L as an enzyme whose activity is essential for the development of type I diabetes in the NOD mouse.