Inhibition of dipeptidyl peptidase IV (DPP-IV) activity by NVP-DPP728, a DPP-IV inhibitor, improves the therapeutic efficacy of glucagon-like peptide-1 (GLP-1). CD26 is a membrane-associated glycoprotein with DPP-IV activity and is expressed on lymphocytes. We investigated the effect of NVP-DPP728 on reversing new-onset diabetes in nonobese diabetic (NOD) mice and modulating the inflammatory response and stimulating beta-cell regeneration. New-onset diabetic NOD mice were treated with NVP-DPP728 for 2, 4, and 6 wk. Blood glucose level was monitored. Regulatory T cells in thymus and secondary lymph nodes, TGF-beta1 and GLP-1 in plasma, and the insulin content in the pancreas were measured. Immunostaining for insulin and bromodeoxyuridine (BrdU) were performed. The correlation of beta-cell replication with inflammation was determined. In NVP-DPP728-treated NOD mice, diabetes could be reversed in 57, 74, and 73% of mice after 2, 4, and 6 wk treatment, respectively. Insulitis was reduced and the percentage of CD4(+)CD25(+)FoxP3(+) regulatory T cells was increased in treated NOD mice with remission. Plasma TGF-beta1 and GLP-1, the insulin content, and both insulin(+) and BrdU(+) beta-cells in pancreas were also significantly increased. No significant correlations were found between numbers of both insulin(+) and BrdU(+) beta-cells in islets and beta-cell area or islets with different insulitis score in NOD mice with remission of diabetes. In conclusion, NVP-DPP728 treatment can reverse new-onset diabetes in NOD mice by reducing insulitis, increasing CD4(+)CD25(+)FoxP3(+) regulatory T cells, and stimulating beta-cell replication. beta-Cell replication is not associated with the degree of inflammation in NVP-DPP728-treated NOD mice.