In type 1 diabetes, the insulin-producing β-cells are destroyed by the immune system. One way of restoring glucose control is to transplant β-cells from a donor. Although this procedure may restore endogenous insulin production, immunosuppressive treatment is needed to prevent the recipient from rejecting the donor-derived islets. We investigated the possibilities of transient expression of the immunosuppressive cytokine transforming growth factor (TGF)-β within islets to achieve long-term graft tolerance. We found that brief expression of TGF-β prevented rejection of syngeneic islets, that there was reduction of dendritic cell (DC) activation in the graft, and that there was reduced reactivation of T cells in the graft-draining lymph nodes. In vitro exposure of bone marrow–derived DCs to TGF-β reduced expression of costimulatory molecules CD80 and CD86, as well as production of proinflammatory cytokines such as interleukin-12 p70 in DCs, but did not alter levels of major histocompatibility complex classes I and II. Furthermore, the capacity of TGF-β–treated bone marrow–derived DCs to activate both CD4+ and CD8+ T cells was reduced. Adding TGF-β–conditioned tolerogenic DCs to the grafted islets led to long-term survival of the graft, demonstrating that TGF-β–induced tolerogenic DCs can provide an effective means to restore immune tolerance in an already established autoimmune disease.