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-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 hypothesized 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: PD-1 binding 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 plasma of individuals with islet autoantibody positivity (Ab+) or recent-onset type 1 diabetes and compared to non-diabetic controls. Results PD-L1 protein colocalized with tetraspanin-associated proteins intracellularly and was detected on the surface of beta cell EVs. 24-h IFN-α or IFN-□ treatment induced a two-fold increase in EV PD-L1 cargo without a corresponding increase in 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 islet Ab+ individuals, particularly in those with single Ab+, Additionally, in from individuals with either Ab+ or type 1 diabetes, but not in controls, 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 islet autoantibody positive patients compared to controls. 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. Research in context What is already known about this subject? (maximum of 3 bullet points) Extracellular vesicles (EVs) serve as paracrine effectors in the islet microenvironment in health and disease. Interferon-alpha (IFN-α) and IFN-gamma (IFN-□) are key cytokines contributing to type 1 diabetes pathophysiology and islet IFN signalling increases beta cell programmed death-ligand 1 (PD-L1) expression. Up-regulation of beta cell PD-L1 in the non-obese diabetic (NOD) mouse model delays progression of type 1 diabetes. What is the key question? (one bullet point only; formatted as a question) Do beta cells exposed to IFNs upregulate EV PD-L1 and can these changes be detected in circulation? What are the new findings? (maximum of 3 bullet points) IFN-α or IFN-□ exposure increases beta cell EV PD-L1 cargo in beta cell lines and human islets. PD-L1 is present on the surface of beta cell EVs, binds PD-1 and EV PD-L1 inhibits proliferation, activation and cytotoxicity of murine CD8 T cells. EV PD-L1 levels are higher in islet autoantibody positive individuals compared to nondiabetic controls and levels of circulating EV PD-L1 positively correlate with residual beta cell function in islet autoantibody positive individuals as well as in individuals with recent-onset type 1 diabetes. How might this impact on clinical practice in the foreseeable future? (one bullet point only) A beneficial effect of PD-L1+ EVs could ultimately be harnessed as an intervention to prevent autoimmune beta cell destruction. Circulating EV PD-L1 cargo has potential as a minimally invasive and informative biomarker to offer insights into the pathogenesis and progression of type 1 diabetes.