Type 1 diabetes in both humans and nonobese diabetic (NOD) mice results from autoreactive T cell destruction of insulin-producing beta cells. Cure of type 1 diabetes may require both reversal of autoimmunity and regeneration of beta cells. Induction of chimerism via allogeneic hematopoietic cell transplantation has been shown to reestablish tolerance in both prediabetic and diabetic NOD mice. However, it is unclear whether this therapy augments beta cell regeneration. Furthermore, this procedure usually requires total body irradiation conditioning of recipients. The toxicity of total body irradiation conditioning and potential for graft-versus-host disease (GVHD) limit the application of allogeneic hematopoietic cell transplantation for treating type 1 diabetes. Here we report that injection of donor bone marrow and CD4+ T cell-depleted spleen cells induced chimerism without causing GVHD in overtly diabetic NOD mice conditioned with anti-CD3/CD8 and that induction of chimerism in new-onset diabetic NOD mice led to elimination of insulitis, regeneration of host beta cells, and reversal of hyperglycemia. Therefore, this radiation-free GVHD preventive approach for induction of chimerism may represent a viable means for reversing type 1 diabetes.