TGF-β signaling in T cells is critical for peripheral T-cell tolerance by regulating effector CD4(+) T helper (Th) cell differentiation. However, it is still controversial to what extent TGF-β signaling in Foxp3(+) regulatory T (Treg) cells contributes to immune homeostasis. Here we showed that abrogation of TGF-β signaling in thymic T cells led to rapid type 1 diabetes (T1D) development in NOD mice transgenic for the BDC2.5 T-cell receptor. Disease development in these mice was associated with increased peripheral Th1 cells, whereas Th17 cells and Foxp3(+) Treg cells were reduced. Blocking of IFN-γ signaling alone completely suppressed diabetes development in these mice, indicating a critical role of Th1 cells in this model. Furthermore, deletion of TGF-β signaling in peripheral effector CD4(+) T cells, but not Treg cells, also resulted in rapid T1D development, suggesting that conventional CD4(+) T cells are the main targets of TGF-β to suppress T1D. TGF-β signaling was dispensable for Treg cell function, development, and maintenance, but excessive IFN-γ production due to the absence of TGF-β signaling in naive CD4(+) T cells indirectly caused dysregulated Treg cell homeostasis. We further showed that T cell-derived TGF-β1 was critical for suppression of Th1 cell differentiation and T1D development. These results indicate that autocrine/paracrine TGF-β signaling in diabetogenic CD4(+) T cells, but not Treg cells, is essential for controlling T1D development.