Anti-CD3 monoclonal antibody (mAb) has been shown to induce tolerance and to be an effective treatment for diabetes both in animal models and in human trials. We have shown that anti-CD3 mAb given orally is biologically active in the gut and suppresses experimental autoimmune encephalitis by the induction of a regulatory T-cell that expresses latency-associated peptide (LAP) on its surface. In the present study, we investigated the effect of oral anti-CD3 mAb on the prevention of autoimmune diabetes in AKR mice in which the low-dose streptozocin (STZ) model induces autoimmunity to the β-cells of the islets. We found that oral anti-CD3 mAb given at doses of 50 and 250 μg/feeding suppressed the incidence of diabetes in this model with the best effects seen at the 50 μg/dose. Associated with suppression, we observed decreased cell proliferation in the spleen and conversion of T-helper (Th)1 responses into Th2/Th3 responses in the periphery, including the pancreatic lymph nodes. Oral anti-CD3 mAb increased the expression of LAP on CD4⁺ T-cells, and these cells could adoptively transfer protection. Protection by oral anti-CD3 was transforming growth factor-β dependent. Our results demonstrate that oral anti-CD3 is effective in the model of STZ-induced diabetes and may be a useful form of therapy for type 1 diabetes in humans.