Peptide loading of MHC class II (MHCII) molecules is directly catalyzed by the MHCII-like molecule HLA-DM (DM). Another MHCII-like molecule, HLA-DO (DO), associates with DM, thereby modulating DM function. The biological role of DO-mediated regulation of DM activity in vivo remains unknown; however, it has been postulated that DO expression dampens presentation of self antigens, thereby preventing inappropriate T cell activation that ultimately leads to autoimmunity. To test the idea that DO modulation of the MHCII self-peptide repertoire mediates self tolerance, we generated NOD mice that constitutively overexpressed DO in DCs (referred to herein as NOD.DO mice). NOD mice are a mouse model for type 1 diabetes, an autoimmune disease mediated by the destruction of insulin-secreting pancreatic beta cells. Our studies showed that diabetes development was completely blocked in NOD.DO mice. Similar to NOD mice, NOD.DO animals selected a diabetogenic T cell repertoire, and the numbers and function of Tregs were normal. Indeed, immune system function in NOD.DO mice was equivalent to that in NOD mice. NOD.DO DCs, however, presented an altered MHCII-bound self-peptide repertoire, thereby preventing the activation of diabetogenic T cells and subsequent diabetes development. These studies show that DO expression can shape the overall MHCII self-peptide repertoire to promote T cell tolerance.