The precise roles of B cells in promoting the pathogenesis of type 1 diabetes remain undefined. Here, we demonstrate that B cell depletion in mice can prevent or delay diabetes, reverse diabetes after frank hyperglycemia, and lead to the development of cells that suppress disease. To determine the efficacy and potential mechanism of therapeutic B cell depletion, we generated a transgenic NOD mouse expressing human CD20 (hCD20) on B cells. A single cycle of treatment with an antibody specific for hCD20 temporarily depleted B cells and significantly delayed and/or reduced the onset of diabetes. Furthermore, disease established to the point of clinical hyperglycemia could be reversed in over one-third of diabetic mice. Why B cell depletion is therapeutic for a variety of autoimmune diseases is unclear, although effects on antibodies, cytokines, and antigen presentation to T cells are thought to be important. In B cell–depleted NOD mice, we identified what we believe is a novel mechanism by which B cell depletion may lead to long-term remission through expansion of Tregs and regulatory B cells. Our results demonstrate clinical efficacy even in established disease and identify mechanisms for therapeutic action that will guide design and evaluation of parallel studies in patients.