AbstractType 1 diabetes (T1D) is an autoimmune disease that results in the destruction of insulin producing pancreatic β-cells. One of the genes associated with T1D is TYK2, which encodes a Janus kinase with critical roles in type-Ι interferon (IFN-Ι) mediated intracellular signalling. To study the role of TYK2 in β-cell development and response to IFNα, we generated TYK2 knockout human iPSCs and directed them into the pancreatic endocrine lineage. Here we show that loss of TYK2 compromises the emergence of endocrine precursors by regulating KRAS expression, while mature stem cell-islets (SC-islets) function is not affected. In the SC-islets, the loss or inhibition of TYK2 prevents IFNα-induced antigen processing and presentation, including MHC Class Ι and Class ΙΙ expression, enhancing their survival against CD8⁺ T-cell cytotoxicity. These results identify an unsuspected role for TYK2 in β-cell development and support TYK2 inhibition in adult β-cells as a potent therapeutic target to halt T1D progression.