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Islet transplantation has considerable potential as a cure for diabetes. However, the difficulties that arise from inflammation and the immunological rejection of transplants must be addressed for islet transplantation to be successful. Alpha 1-antitrypsin (AAT) inhibits the damage on β cells caused by inflammatory reactions and promotes β-cell survival and proliferation. This protein also induces specific immune tolerance to transplanted β cells. However, whether the expression of AAT in β cells themselves could eliminate or decrease immunological rejection of transplants is not clear. Therefore, we established a β cell line (NIT-hAAT) that stably expresses human AAT. Interestingly, in a cytotoxic T lymphocyte (CTL)-killing assay, we found that hAAT reduced apoptosis and inflammatory cytokine production in NIT-1 cells and regulated the Th1/Th2 cytokine balance in vitro. In vivo transplantation of NIT-hAAT cells into mice with diabetes showed hAAT inhibited immunological rejection for a short period of time and increased the survival of transplanted β cells. This study demonstrated that hAAT generated remarkable immunoprotective and immunoregulation effects in a model of β cell islet transplantation for diabetes model.