Polysaccharide (PLP) isolated from Phellinus linteus inhibits tumor growth and metastasis by enhancing immune functions of macrophages, dendritic cells, NK cells, T cells, and B cells. Here, we report that PLP can inhibit the development of autoimmune diabetes in non-obese diabetic (NOD) mice. Although 80% of the NOD mice had developed diabetes by 24 weeks of age, none of the PLP-treated NOD mice developed diabetes. The mean blood glucose levels were 110mg/dl in PLP-treated mice and 499mg/dl in control NOD mice. Histological examination of the pancreatic islets revealed that most of the islets isolated from PLP-treated mice were less infiltrated with lymphocytes compared with those of control mice. Spleen cells from diabetic NOD mice could adaptively transfer diabetes into NOD/SCID mice, but those from PLP-treated NOD mice showed delayed transfer of diabetes. PLP inhibited the expression of inflammatory cytokines, including IFN-gamma, IL-2, and TNF-alpha by Th1 cells and macrophages, but up-regulated IL-4 expression by Th2 cells in NOD mice. PLP did not prevent streptozotocin-induced diabetic development in ICR mice. Taken together, these results suggest that PLP inhibits the development of autoimmune diabetes by regulating cytokine expression.