Glatiramer acetate (GA) is an immunomodulatory peptide drug used to treat multiple sclerosis. Its treatment effect has been expanded to other autoimmune conditions such as uveoretinitis, inflammatory bowel disease, graft rejection and hepatic fibrosis. Here, we report that GA was effective in altering the clinical course of diabetes in cyclophosphamide (CY)-potentiated non-obese diabetic (CY-NOD) mice. Treatment with GA significantly reduced the diabetic rate in the mice and ameliorated insulitis, which coincided with increased CD4+CD25+Foxp3+ T cell response in treated mice. GA treatment led to increased expression of transcription factor Foxp3 and elevated production of interleukin-4 (IL-4) both in vivo and in vitro. It was evident that the effect of GA on up-regulation of Foxp3 was mediated partially through IL-4. IL-4 was found to maintain Foxp3 expression and regulatory function of CD4+CD25+ regulatory T cells (Tregs). This study provides new evidence that GA has treatment potential for type 1 diabetes through the induction of Tregs and that increased IL-4 production is partially responsible for the enhanced Treg's function in GA treatment.