Growing insight into the pathogenesis of autoimmune diseases and numerous studies in preclinical models highlights the potential of regulatory T cells to restore tolerance. By using non-obese diabetic (NOD) BDC2.5 TCR-transgenic (Tg), and IL-10 and Foxp3 double-reporter mice, we demonstrate that alteration of gut microbiota during cohousing experiments or treatment with anti-CD3 mAb significantly increase intestinal IL-10–producing type 1 regulatory T (Tr1) cells and decrease diabetes incidence. These intestinal antigen-specific Tr1 cells have the ability to migrate to the periphery via a variety of chemokine receptors such as CCR4, CCR5, and CCR7 and to suppress proliferation of Th1 cells in the pancreas. The ability of Tr1 cells to cure diabetes in NOD mice required IL-10 signaling, as Tr1 cells could not suppress CD4⁺ T cells with a dominant-negative IL-10R. Taken together, our data show a key role of intestinal Tr1 cells in the control of effector T cells and development of diabetes. Therefore, modulating gut-associated lymphoid tissue to boost Tr1 cells may be important in type 1 diabetes management.