Type 1 diabetes is one of the most extensively studied autoimmune diseases, but the cellular and molecular mechanisms leading to T cell-mediated destruction of insulin-producing beta cells are still not well understood. In this study, we show that regulatory T cells (T-regs) in NOD mice undergo age-dependent loss of suppressor functions exacerbated by the decreased ability of activated effector T cells to upregulate Foxp3 and generate T-regs in the peripheral organs. This age-dependent loss is associated with reduced intercellular communication mediated by gap junctions, which is caused by impaired upregulation and decreased expression of connexin 43. Regulatory functions can be corrected, even in T cells isolated from aged, diabetic mice, by a synergistic activity of retinoic acid, TGF-beta, and IL-2, which enhance connexin 43 and Foxp3 expression in Tregs and restore the ability of conventional CD4(+) T cells to upregulate Foxp3 and generate peripherally derived T-regs. Moreover, we demonstrate that suppression mediated by T-regs from diabetic mice is enhanced by a novel reagent, which facilitates gap junction aggregation. In summary, our report identifies gap junction-mediated intercellular communication as an important component of the T-reg suppression mechanism compromised in NOD mice and suggests how T-reg mediated immune regulation can be improved.