Immunotherapy using short immunogenic peptides of disease-related autoantigens restores immune tolerance in preclinical disease models. We studied safety and mechanistic effects of injecting human leukocyte antigen–DR4(DRB1*0401)–restricted immunodominant proinsulin peptide intradermally every 2 or 4 weeks for 6 months in newly diagnosed type 1 diabetes patients. Treatment was well tolerated with no systemic or local hypersensitivity. Placebo subjects showed a significant decline in stimulated C-peptide (measuring insulin reserve) at 3, 6, 9, and 12 months versus baseline, whereas no significant change was seen in the 4-weekly peptide group at these time points or the 2-weekly group at 3, 6, and 9 months. The placebo group’s daily insulin use increased by 50% over 12 months but remained unchanged in the intervention groups. C-peptide retention in treated subjects was associated with proinsulin-stimulated interleukin-10 production, increased FoxP3 expression by regulatory T cells, low baseline levels of activated β cell–specific CD8 T cells, and favorable β cell stress markers (proinsulin/C-peptide ratio). Thus, proinsulin peptide immunotherapy is safe, does not accelerate decline in β cell function, and is associated with antigen-specific and nonspecific immune modulation.