Spontaneous mutation of Fas (lpr) or FasL (gld) completely protects nonobese diabetic mice from autoimmune diabetes but also causes massive double-negative T-cell lymphoproliferation. In this study, we used bone marrow chimeras and adoptive transfer analysis to investigate further the role of FasL in the pathogenesis of autoimmune diabetes and to determine whether gld-induced tolerance and double-negative T-cell lymphoproliferation can be uncoupled from each other. We show that FasL expressed on hematopoietic and nonhematopoietic compartments plays nonredundant roles in the pathogenesis of autoimmune diabetes. Mutation of FasL in either compartment interferes with the autoimmune process and prevents onset of diabetes, but FasL expressed in the hematopoietic compartment is the dominant regulator of T-cell homeostasis. Furthermore, pathogenesis of diabetes is dependent on normal FasL expression in both compartments, whereas only minimal FasL function is required to maintain T-cell homeostasis. Consequently, partial disruption of FasL protects from autoimmune diabetes without causing T-cell lymphoproliferation. This is demonstrated genetically in nonobese diabetic-gld/+ mice and pharmacologically by using FasL-neutralizing antibody. These results have important implications for understanding the role of the Fas pathway in pathogenesis of autoimmune diseases and for designing novel FasL-modulating therapies.