In type 1 diabetes, the breach of central and peripheral tolerance results in autoreactive T cells that destroy insulin-producing, pancreatic beta cells. In this study, we identify a critical subpopulation of dendritic cells responsible for mediating both the cross-presentation of islet Ags to CD8(+) T cells and the direct presentation of beta cell Ags to CD4(+) T cells. These cells, termed merocytic dendritic cells (mcDCs), are more numerous in the NOD mouse and, when Ag-loaded, rescue CD8(+) T cells from peripheral anergy and deletion while stimulating islet-reactive CD4(+) T cells. When purified from the pancreatic lymph nodes of overtly diabetic NOD mice, mcDCs break peripheral T cell tolerance to beta cells in vivo and induce rapid onset type 1 diabetes in the young NOD mouse. Thus, the mcDC subset appears to represent the long-sought APC responsible for breaking peripheral tolerance to beta cell Ags in vivo.