Autoreactive T cells that escape negative selection in the thymus do not normally cause productive immune responses to self-antigens because of a number of regulatory mechanisms. Studies with anti-CD3 monoclonal antibodies (mAbs) have suggested that immune regulatory mechanisms are induced by drug treatments that are able to stop on-going unwanted immune responses, such as type 1 diabetes, involving induction of regulatory T cells. TGF-beta dependent and independent mechanisms have been described involving CD4(+) as well as CD8(+) T cells. The challenge is now to apply these mechanisms in an antigen-specific manner and so that lasting tolerance to the autoimmune responses can be maintained. We discuss recent data concerning the mechanisms of anti-CD3 mAb treatment and the ways in which our understanding of these mechanisms can be used to develop adoptive immune therapy with regulatory T cells to treat patients with type 1 diabetes or other autoimmune diseases.