CD4+CD25+^high regulatory T cells (Tregs) play a pivotal role in the control of the immune response. A growing body of evidence suggests the reduced function of these cells in autoimmune diseases, including type 1 diabetes (T1D). Restoration of their function can potentially delay further disease development. In the present study, we have converted conventional effector T cells into induced Tregs (iTregs) in recent-onset (RO) T1D (n=9) and compared them with the same cells generated in controls (n=12) and in long-standing (LS) T1D subjects (n=9). The functional potential of in-vitro-generated Tregs was measured by using an in vitro proliferation assay. We noted that the suppressive potential of iTregs exceeded that of natural regulatory T cells (nTregs) only in the RO T1D subjects. We showed that iTregs from RO T1D subjects had increased expression of Foxp3, E3 ubiquitin ligase (ITCH) and TGF-β-inducible early gene 1 (TIEG1) compared with control and LS T1D subjects. We also expanded natural, thymically derived Tregs (nTregs) and compared the functional ability of these cells between subject groups. Expanded cells from all three subject groups were suppressive. RO T1D subjects were the only group in which both iTregs and expanded Tregs were functional, suggesting that the inflammatory milieu impacts in vitro Treg generation. Future longitudinal studies should delineate the actual contribution of the stage of disease to the quality of in-vitro-generated Tregs.