Molecular checkpoints that trigger the onset of islet autoimmunity or progression to human type 1 diabetes (T1D) are incompletely understood. Using T cells from children at an early stage of islet autoimmunity without clinical T1D, we find that a microRNA181a (miRNA181a)–mediated increase in signal strength of stimulation and costimulation links nuclear factor of activated T cells 5 (NFAT5) with impaired tolerance induction and autoimmune activation. We show that enhancing miRNA181a activity increases NFAT5 expression while inhibiting FOXP3+ regulatory T cell (Treg) induction in vitro. Accordingly, Treg induction is improved using T cells from NFAT5 knockout (NFAT5ko) animals, whereas altering miRNA181a activity does not affect Treg induction in NFAT5ko T cells. Moreover, high costimulatory signals result in phosphoinositide 3-kinase (PI3K)–mediated NFAT5, which interferes with FoxP3+ Treg induction. Blocking miRNA181a or NFAT5 increases Treg induction in murine and humanized models and reduces murine islet autoimmunity in vivo. These findings suggest targeting miRNA181a and/or NFAT5 signaling for the development of innovative personalized medicines to limit islet autoimmunity.