A cloned Thl cell line was isolated from pancreatic lymph nodes of NOD mice that carries a T-cell receptor encoding Vβ14 and proliferates in response to NOD islets, islet supernatant, and crystalline bovine and rat insulin, specifically to a B-chain peptide bound to IA^g7. The response to islet supernatant was reduced by 75% by anti-insulin antibody treatment. The insulin-reactive clone reduced insulitis and totally blocked the development of spontaneous diabetes in NOD mice (n = 8) as well as the adoptive transfer of diabetes into irradiated NOD mice following the injection of splenocytes from diabetic mice (n = 13). Trafficking of the adoptively transferred cells was assessed by labeling the clone or diabetic splenocytes with a fluorescent marker (Dil). The labeled clone was detected in the islet periphery, whereas labeled splenocytes alone invaded the islets by 3 days. In contrast, the protective clone dramatically delayed and reduced the number of labeled diabetic splenocytes infiltrating the islet, although their appearance in the spleen was unaffected. In vitro, the clone as well as supernatant derived from the clone blocked the proliferation of diabetic NOD splenocytes to islets. This inhibitory effect was diminished by anti–transforming growth factor-β. In conclusion, an insulin-specific Thl cell was isolated from NOD mice that traffics to the islet and prevents the spontaneous development and the adoptive transfer of diabetes. It appears to act locally by releasing transforming growth factor-β and/or other factors that inhibit homing to and/or proliferation of diabetic splenocytes within the islet. These findings may provide insights into and suggest mechanisms for the protective effects of insulin therapy against diabetes.