The non-obese diabetic (NOD) mouse is an animal model for insulin- dependent diabetes that has many similarities to the human disease. NOD mice transgenic for the Ea gene, allowing expression of the E molecule, are protected from diabetes and rarely develop insulitis. An Ea transgene mutated in the promoter region, (ΔY) lacks E expression on most B cells, thymic medullary epithelium and primary antigen-presenting cells, and confers no protection whatsoever. We have used these transgenic NOD mice, together with non-transgenic NOD mice, to study the correlation of E expression and production of interleukin-4 (IL-4) and interferon-γ (IFN-γ). We show that protected E-transgenic NOD mice have elevated levels of IL-4 compared with non-transgenic mice, both in the thymus and in the periphery. However, susceptible ΔY-transgenic mice have elevated thymic IL-4 levels, but express almost as little IL-4 as non-transgenic NOD mice in the periphery. This drop in peripheral IL-4 production seen in ΔY-transgenic mice thus correlates with the decreased E expression in the periphery of ΔY-transgenic NOD mice. In contrast, there were no differences in IFN-γ production between the three NOD lines. We suggest that Ea-transgenic NOD mice have E-selected regulatory T cells producing IL-4, which are subsequently activated by E-expressing primary antigen-presenting cells in the periphery. This activation would then be instrumental for the E-mediated protection from disease in NOD mice. Such a process would explain the total absence of protection in ΔY-transgenic NOD mice, despite their widespread E expression.