<jats:title>Abstract</jats:title> <jats:p>Antigen‑specific activation of T cells is an essential process in the control of effector immune responses. Defects in T cell activation, particularly in the co‑stimulation step, have been associated with many autoimmune conditions including type 1 diabetes (T1D). Recently, we demonstrated that V-set domain-containing T cell activation inhibitor-1 (VTCN1) protein is reduced on antigen-presenting cells from diabetes-susceptible NOD mice and human T1D patients. Here, we show existence of a similar defect in the pancreatic islets, as both α and β cells gradually lose their VTCN1 protein during T1D development despite the up‑regulation of the VTCN1 gene. Diminishment of functional islet cells’ VTCN1 is caused by the metalloproteinase NRD1 and leads to a significant induction of proliferation and cytokine production by diabetogenic T cells. Inhibition of NRD1 activity, on the other hand, stabilizes VTCN1 and dulls the anti-islet T cell responses. Therefore, we suggest a general endogenous mechanism of defective VTCN1 function, which affects both lymphoid and peripheral target tissues during T1D progression and results in aggressive anti-islet T cell responses. This mechanism is tied to up-regulation of NRD1 expression and likely acts in two synergistic proteolytic modes: cell-intrinsic intracellular and cell-extrinsic systemic. Our results highlight an importance of VTCN1 stabilization on cell surfaces for the restoration of altered balance of immune control during T1D.</jats:p>