We have previously shown that HLA-DQA1, a peptide derived from a highly conserved region of MHC class II, prevents alloreactive T cell priming and effector function in vivo, although underlying mechanisms are obscure. In this study, we demonstrate that 28% of mice treated with HLA-DQA1 combined with low-dose rapamycin achieved permanent engraftment of fully MHC-disparate islet allografts and significantly prolonged survival in the remaining animals (log rank, p< 0.001). Immunohistologic examination of the grafts from HLA-DQA1/rapamycin-treated animals revealed up-regulated expression of TGF-ß and FoxP3. In vivo administration of blocking anti-TGF-ß or depleting anti-CD25 mAb augmented T cell alloimmunity and prevented the long-term engraft induced by HLA-DQA1. In vitro experiments further showed that HLA-DQA1 induced differentiation of CD4+ T cells into CD4+ CD25+ FoxP3+ regulatory T cells. Together, these data provide the first demonstration that HLA-DQA1, a MHC class II-derived peptide, can prolong allograft survival via a TGF-β and regulatory T cell-dependent mechanisms.