We explored T cell responses to the self class II MHC (I-Ag7) beta-chain-derived peptides in diabetic and prediabetic nonobese diabetic (NOD) mice. We found that one of these immunodominant epitopes of the beta-chain of I-Ag7 molecule, peptide 54-76, could regulate autoimmunity leading to diabetes in NOD mice. T cells from prediabetic young NOD mice do not respond to the peptide 54-76, but T cells from diabetic NOD mice proliferated in response to this peptide. T cells from older nondiabetic mice or mice protected from diabetes do not respond to this peptide, suggesting a role for peptide 54-76-specific T cells in pathogenesis of diabetes. We show that this peptide is naturally processed and presented by the NOD APCs to self T cells. However, the peptide-specific T cells generated after immunization of young mice regulate autoimmunity in NOD mice by blocking the diabetogenic cells in adoptive transfer experiments. The NOD mice immunized with this peptide are protected from both spontaneous and cyclophosphamide-induced insulin-dependent diabetes mellitus. Immunization of young NOD mice with this peptide elicited T cell proliferation and production of Th2-type cytokines. In addition, immunization with this peptide induced peptide-specific Abs of IgG1 isotype that recognized native I-Ag7 molecule on the cell surface and inhibited the T cell proliferative responses. These results suggest that I-Abetag7(54-76) peptide-reactive T cells are involved in the pathogenesis of diabetes. However, immunization with this peptide at young age induces regulatory cells and the peptide-specific Abs that can modulate autoimmunity in NOD mice and prevent spontaneous and induced diabetes.