A new differentiation pathway for CD4(-)CD8(-) (DN) T cells has recently been identified that exhibits the potent function of peripheral converted DN T cells in suppressing immune responses and provides the potential to treat autoimmune diseases. The aim of this study was to determine if the DN T cells converted from CD4(+) T cells of NOD mice retain the antigen-specific regulatory capacity and prevent autoimmune diabetes in vivo. We also sought to determine if the combination of DN T cells with rapamycin promotes islet allograft survival in autoimmune diabetic NOD recipients. NOD CD4(+) T cells were converted to DN T cells in an in vitro mixed-lymphocyte reaction, with or without GAD65 peptide, as previously reported. The antigen-specific DN T cells were adoptively transferred to NOD/SCID mice, new-onset diabetic NOD mice or islet-allograft-recipient NOD mice as the part of cell-based therapy. The development of diabetes and allograft survival was assessed by monitoring blood glucose levels. NOD CD4(+) T cells were converted in vitro to DN T cells at a rate of 50% and expressed unique cell features. The DN T cells from NOD donors blocked autoimmunity and prevented diabetes in NOD models, and these effects were even greater for GAD65-peptide-primed DN T cells. DN T cells acted in conjunction with rapamycin to suppress alloantigen-triggered T cell proliferation, promoted apoptosis and prolonged islet allograft survival in NOD recipients. Administration of the islet beta cell antigen-specific DN T cells can prevent the development of autoimmune diabetes and promote islet allograft survival in NOD mice.