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Type 1 diabetes is a polygenic disease that results in an autoimmune response directed against insulin-producing beta cells. <i>PTPN2</i> is a known high-risk type 1 diabetes associated gene expressed in both immune- and pancreatic beta cells, but how genes affect the development of autoimmune diabetes is largely unknown. We employed CRISPR/Cas9 technology to generate a functional knockout of <i>PTPN2</i> in human pluripotent stem cells (hPSC) followed by differentiating stem-cell-derived beta-like cells (sBC) and detailed phenotypical analyses. The differentiation efficiency of <i>PTPN2</i> knockout (PTPN2 KO) sBC is comparable to wild-type (WT) control sBC. Global transcriptomics and protein assays revealed the increased expression of HLA Class I molecules in PTPN2 KO sBC at a steady state and upon exposure to proinflammatory culture conditions, indicating a potential for the increased immune recognition of human beta cells upon differential <i>PTPN2</i> expression. sBC co-culture with autoreactive preproinsulin-reactive T cell transductants confirmed increased immune stimulations by PTPN2 KO sBC compared to WT sBC. Taken together, our results suggest that the dysregulation of <i>PTPN2</i> expression in human beta cell may prime autoimmune T cell reactivity and thereby contribute to the development of type 1 diabetes.