Dendritic cell (DC) differentiation is abnormal in type 1 diabetes mellitus (T1DM). However, the nature of the relationship between this abnormality and disease pathogenesis is unknown. We studied the LPS response in monocytes and monocyte-derived DCs isolated from T1DM patients and from non-T1DM controls. In T1DM patients, late LPS-mediated nuclear DNA binding by RelA, p50, c-Rel, and RelB was impaired as compared with type 2 DM, rheumatoid arthritis, and healthy subjects, associated with impaired DC CD40 and MHC class I induction but normal cytokine production. In TIDM monocytes, RelA and RelB were constitutively activated, and the src homology 2 domain-containing protein tyrosine phosphatase (SHP-1), a negative regulator of NF-κB, was overexpressed. Addition of sodium stibogluconate, a SHP-1 inhibitor, to DCs differentiating from monocyte precursors restored their capacity to respond to LPS in∼ 60% of patients. The monocyte and DC NF-κB response to LPS is thus a novel phenotypic and likely pathogenetic marker for human T1DM. SHP-1 is at least one NF-κB regulatory mechanism which might be induced as a result of abnormal inflammatory signaling responses in T1DM monocytes.