One of the BB rat diabetes (diabetes mellitus (DM)) susceptibility genes is an Ian5 mutation resulting in premature apoptosis of naive T cells. Impaired differentiation of regulatory T cells has been suggested as one possible mechanism through which this mutation contributes to antipancreatic autoimmunity. Using Ian5 congenic inbred rats (wild-type (non-lyp BB) and mutated (BB)), we assessed the development of BB regulatory CD8(-)4(+)25(+)T cells and their role in the pathogenesis of DM. BB rats have normal numbers of functional CD8(-)4(+)25(+)Foxp3(+) thymocytes. The proportion of CD25(+) cells among CD8(-)4(+) recent thymic emigrants is also normal while it is increased among more mature CD8(-)4(+) T cells. However, BB CD8(-)4(+)25(+)Foxp3(+) thymocytes fail to undergo homeostatic expansion and survive upon transfer to nude BB rats while Foxp3 expression is reduced in mature CD8(-)4(+)25(+) T cells suggesting that these cells are mostly activated cells. Consistent with this interpretation, peripheral BB CD8(-)4(+)25(+) T cells do not suppress anti-TCR-mediated activation of non-lyp BB CD8(-)4(+)25(-) T cells but rather stimulate it. Furthermore, adoptive transfer of unfractionated T cells from diabetic BB donors induces DM in 71% of the recipients while no DM occurred when donor T cells are depleted of CD8(-)4(+)25(+) cells. Adoptive transfer of 10(6) regulatory non-lyp BB CD8(-)4(+)25(+) T cells to young BB rats protects the recipients from DM. Taken together, these results demonstrate that the BB rat Ian5 mutation alters the survival and function of regulatory CD8(-)4(+)25(+) T cells at the post-thymic level, resulting in clonal expansion of diabetogenic T cells among peripheral CD8(-)4(+)25(+) cells.