Various defects in antigen-presenting cells (APCs) and T-cells, including regulatory cells, have been associated with type 1 diabetes development in NOD mice. CD4⁺CD25⁺ regulatory cells play a crucial role in controlling various autoimmune diseases, and a deficiency in their number or function could be involved in disease development. The current study shows that NOD mice had fewer CD4⁺CD25⁺ regulatory cells, which expressed normal levels of glucocorticoid-induced tumor necrosis factor receptor and cytotoxic T-lymphocyte–associated antigen-4. We have also found that NOD CD4⁺CD25⁺ cells regulate poorly in vitro after stimulation with anti-CD3 and NOD APCs in comparison with B6 CD4⁺CD25⁺ cells stimulated with B6 APCs. Surprisingly, stimulation of NOD CD4⁺CD25⁺ cells with B6 APCs restored regulation, whereas with the reciprocal combination, NOD APCs failed to activate B6 CD4⁺CD25⁺ cells properly. Interestingly, APCs from disease-free (>30 weeks of age), but not diabetic, NOD mice were able to activate CD4⁺CD25⁺ regulatory function in vitro and apparently in vivo because only spleens of disease-free NOD mice contained potent CD4⁺CD25⁺ regulatory cells that prevented disease development when transferred into young NOD recipients. These data suggest that the failure of NOD APCs to activate CD4⁺CD25⁺ regulatory cells may play an important role in controlling type 1 diabetes development in NOD mice.