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Aims/hypothesis: Surviving beta cells in type 1 diabetes respond to inflammation by upregulating programmed death-ligand 1 (PD-L1) to engage immune cell programmed death protein 1 (PD-1) and limit destruction by self-reactive immune cells. Extracellular vesicles (EVs) and their cargo can serve as biomarkers of beta cell health and contribute to islet intercellular communication. We hypothesised that the inflammatory milieu of type 1 diabetes increases PD-L1 in beta cell EV cargo and that EV PD-L1 may protect beta cells against immune-mediated cell death. Methods: Beta cell lines and human islets were treated with proinflammatory cytokines to model the proinflammatory type 1 diabetes microenvironment. EVs were isolated using ultracentrifugation or size exclusion chromatography and analysed via immunoblot, flow cytometry and ELISA. EV PD-L1 binding to PD-1 was assessed using a competitive binding assay and in vitro functional assays testing the ability of EV PD-L1 to inhibit NOD CD8+ T cells. Plasma EV and soluble PD-L1 were assayed in the plasma of islet autoantibody-positive (Ab+) individuals or individuals with recent-onset type 1 diabetes and compared with levels in non-diabetic control individuals. Results: PD-L1 protein co-localised with tetraspanin-associated proteins intracellularly and was detected on the surface of beta cell EVs. Treatment with IFN-α or IFN-γ for 24 h induced a twofold increase in EV PD-L1 cargo without a corresponding increase in the number of EVs. IFN exposure predominantly increased PD-L1 expression on the surface of beta cell EVs and beta cell EV PD-L1 showed a dose-dependent capacity to bind PD-1. Functional experiments demonstrated specific effects of beta cell EV PD-L1 to suppress proliferation and cytotoxicity of murine CD8+ T cells. Plasma EV PD-L1 levels were increased in Ab+individuals, particularly in those positive for a single autoantibody. Additionally, in Ab+ individuals or those who had type 1 diabetes, but not in control individuals, plasma EV PD-L1 positively correlated with circulating C-peptide, suggesting that higher EV PD-L1 could be protective for residual beta cell function. Conclusions/interpretation: IFN exposure increases PD-L1 on the beta cell EV surface. Beta cell EV PD-L1 binds PD1 and inhibits CD8+ T cell proliferation and cytotoxicity. Circulating EV PD-L1 is higher in Ab+ individuals than in control individuals. Circulating EV PD-L1 levels correlate with residual C-peptide at different stages in type 1 diabetes progression. These findings suggest that EV PD-L1 could contribute to heterogeneity in type 1 diabetes progression and residual beta cell function and raise the possibility that EV PD-L1 could be exploited as a means to inhibit immune-mediated beta cell death. [ABSTRACT FROM AUTHOR]