Abstract The activity of regulatory T cells (Treg) is widely accepted to play a central role in preventing pathogenic immune responses against self-Ags. However, it is not clear why such regulation breaks down during the onset of autoimmunity. We have studied self-Ag-specific Treg during the induction of spontaneous diabetes. Our data reveal a shift in the balance between regulatory and pathogenic islet-reactive T cells in the pancreas-draining lymph nodes during disease onset. Treg function was not compromised during disease initiation, but instead conventional T cells showed reduced susceptibility to Treg-mediated suppression. Release from Treg suppression was associated with elevated levels of IL-21 in vivo, and provision of this cytokine abrogated Treg suppression in vitro and in vivo. These data suggest that immunological protection of a peripheral tissue by Treg can be subverted by IL-21, suggesting new strategies for intervention in autoimmunity.