Type 1 diabetes (T1D) continues to be a major source of morbidity and mortality in over 0.9% US population with an economic burden in billions of dollars. The two current methods used to treat T1D are insulin therapy and allogeneic islet/pancreas transplantation (Tx), both of which have major limitations. Insulin administration does not completely prevent the complications associated with diabetes. Allogeneic islet/pancreas Tx suffers from rejection as well as renal and islet toxicities associated with chronic use of immunosuppressive drugs. Therefore, the primary objective of this grant proposal is to establish a novel immunomodulatory protocol to confer tolerance to allogeneic islet grafts in the absence of continuous immunosuppression. This will be achieved by engineering allogeneic islets ex vivo to transiently display on their surface a novel form of TGF1, SA-TGF, protein and use the engineered islets to induce tolerance and treat T1D using rodent models. T1D and allogeneic islet cell destruction is primarily mediated by T cells directed at unique beta cell and Tx antigens. Controlling the function of T pathogenic cells is, therefore, critical to tolerance induction to auto/alloantigens and treatment of T1D using allogeneic islets. We herein propose to use SA-TGF as an immunomodulatory molecule to achieve this goal. TGF1 has pleiotropic immune functions and is critical for tolerance to self-antigen. TGF also plays an important role in acquired tolerance to auto and alloantigens using various immunomodulatory approaches. Most importantly, ectopic expression of TGF in pancreatic islets using transgenic systems or viral vectors proved effective in inducing tolerance to autoantigens in NOD mouse model of human T1D. However, continuous expression of this molecule is associated with massive fibrosis and long-term beta cell failure. Importantly, transient expression of TGF in beta cells using inducible transgenic systems overcame its deleterious effects without compromising its tolerogenic function. Inasmuch as this transgenic approach is not applicable to clinical islet Tx, we envisioned that the transient display of TGF? at protein level on the surface of islets in a clinically applicable manner may achieve tolerance without its reported complications arising from continuous expression. In limited preliminary studies, we demonstrated that the transient display of SA-TGF on pancreatic islets was effective in overcoming rejection in a chemically induced islet Tx model. Building on these strong preliminary data, we herein propose to use SA-TGF-engineered allogeneic islets as a means of immunomodulation to prevent graft rejection and treat diabetes in chemically and spontaneously diabetic mouse models. A series of studies will be conducted to delineate the implicated mechanisms of the tolerance. Rapid and transient display of SA-TGF protein on pancreatic islets offers a whole new means of intervention in the areas of autoimmunity and Tx. This approach possesses the simplicity, safety, and efficacy required to make it a clinically relevant alternative that may accomplish the same goals as gene therapy in the treatment of a broad spectrum of immune-based diseases, including T1D.