Protection of transplanted pancreatic islet grafts in recipients with autoimmune diabetes depends on the suppression of autoimmune recurrence and allogeneic rejection. The aim of this study was to investigate the efficiency of viral IL-10 gene delivery in the prevention of autoimmune recurrence following islet transplantation. We evaluated the effectiveness of a systemically delivered adeno-associated viral vector (AAV vIL-10) carrying viral IL-10 in protecting islet engraftment. We observed significant prolongation of graft survival after treatment with AAV vIL-10 when using islets from donors lacking autoimmunity. We found that the mechanism of vIL-10-mediated protection was associated with suppression of T cell activation and that donor immune cells that were simultaneously transferred with the islet grafts could induce autoimmune recurrence. AAV vIL-10 gene transfer suppressed previously activated T cells and protected grafted islets from autoimmune-mediated destruction. We conclude that vIL-10 can regulate autoimmune activity and that transfer of its gene may have potential for therapeutic islet transplantation.