Purified hematopoietic stem cells (HSCs) were transplanted into NOD mice to test whether development of hyperglycemia could be prevented. Engraftment of major histocompatibility complex-mismatched HSCs was compared with bone marrow (BM) grafts. HSCs differed from BM because HSCs were more strongly resisted and HSC recipients retained significant levels of NOD T-cells, whereas BM recipients were full donor chimeras. Despite persistent NOD T-cells, all HSC chimeras were protected from hyperglycemia, and attenuation of islet lesions was observed. T-cell selection was altered in allogeneic HSC recipients as demonstrated by deletion of both donor and host superantigen-specific T-cells. Syngeneic and congenic hematopoietic cell transplants were also performed to differentiate the influence of the preparative regimen(s) versus the allografts. Unlike the allogeneic HSC transplantations, syngeneic or congenic grafts did not retard diabetes development. In a pilot study, overtly diabetic NOD mice were cured by co-transplantation of allogeneic HSCs and donor-matched islets. We conclude that allogeneic HSC transplants block allo- and autoimmunity, despite residual host T-cell presence. These data demonstrate for the first time that purified HSC grafts block development of autoimmune diabetes and illuminate how HSC grafts alter thymic and peripheral T-cell responses against auto- and alloantigens.