A failure in self-tolerance leads to autoimmune destruction of pancreatic β-cells and type 1 diabetes (T1D). Low-molecular-weight dextran sulfate (DS) is a sulfated semisynthetic polysaccharide with demonstrated cytoprotective and immunomodulatory properties in vitro. However, whether DS can protect pancreatic β-cells, reduce autoimmunity, and ameliorate T1D is unknown. In this study, we report that DS, but not dextran, protects human β-cells against cytokine-mediated cytotoxicity in vitro. DS also protects mitochondrial function and glucose-stimulated insulin secretion and reduces chemokine expression in human islets in a proinflammatory environment. Interestingly, daily treatment with DS significantly reduces diabetes incidence in prediabetic NOD mice and, most importantly, reverses diabetes in early-onset diabetic NOD mice. DS decreases β-cell death, enhances islet heparan sulfate (HS)/HS proteoglycan expression, and preserves β-cell mass and plasma insulin in these mice. DS administration also increases the expression of the inhibitory costimulatory molecule programmed death-1 (PD-1) in T cells, reduces interferon-γCD4 and CD8 T cells, and enhances the number of FoxP3 cells. Collectively, these studies demonstrate that the action of one single molecule, DS, on β-cell protection, extracellular matrix preservation, and immunomodulation can reverse diabetes in NOD mice, highlighting its therapeutic potential for the treatment of T1D.