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Hematopoietic stem and progenitor cells (HSPCs) are multipotent stem cells that have been harnessed as a curative therapy for patients with hematological malignancies. Notably, the discovery that HSPCs are endowed with immunoregulatory properties suggests that HSPC-based therapeutic approaches may be used to treat autoimmune diseases. Indeed, infusion with HSPCs has shown promising results in the treatment of type 1 diabetes (T1D) and remains the only “experimental therapy” that has achieved a satisfactory rate of remission (nearly 60%) in T1D. Patients with newly diagnosed T1D have been successfully reverted to normoglycemia by administration of autologous HSPCs in association with a non-myeloablative immunosuppressive regimen. However, this approach is hampered by a high incidence of adverse effects linked to immunosuppression. Herein, we report that while the use of autologous HSPCs is capable of improving C-peptide production in patients with T1D, ex vivo modulation of HSPCs with prostaglandins (PGs) increases their immunoregulatory properties by upregulating expression of the immune checkpoint-signaling molecule PD-L1. Surprisingly, CXCR4 was upregulated as well, which could enhance HSPC trafficking toward the inflamed pancreatic zone. When tested in murine and human in vitro autoimmune assays, PG-modulated HSPCs were shown to abrogate the autoreactive T cell response. The use of PG-modulated HSPCs may thus provide an attractive and novel treatment of autoimmune diabetes.