Activated islet specific T cells are central to the destructive autoimmune response observed in type 1 diabetes (T1D). Not surprisingly, intense focus is placed on understanding how autoreactive T cell responses arise and contribute to disease pathology in the hope of using this information to develop novel therapeutic strategies for treatment of T1D. Here we investigate the mechanisms underlying defective c-Maf binding to the IL-4 promoter in T cells from diabetes prone mice and identify the mechanisms responsible for suppression of T cells by the inhibitory receptor Ly49A. It is not clear why development of protective Th2 cells is poor in T1D. c-Maf transactivates the IL-4 gene promoting Th2 cell development; therefore abnormalities in c-Maf may contribute to reduced IL-4 production by CD4 cells from nonobese diabetic (NOD) mice. Here we demonstrate that, despite normal expression, c-Maf binds poorly to the IL-4 promoter (IL-4p) in NOD CD4 cells. Immunoblots demonstrate that c-Maf can be modified at lysine 33 by small ubiquitin-like modifier-1 (SUMO-1). Sumoylation is facilitated by direct interaction with the E2 conjugating enzyme Ubc9 and increases following T cell stimulation. In addition, c-Maf physically interacts with p65/RelA. This interaction is dependent on the DNA binding domain of c-Maf and phosphorylation of p65 at serine 536. In transfected cells, overexpression of SUMO-1 or p65 decreases c-Maf transactivation of IL-4p-driven luciferase reporter activity, reduces c-Maf binding to the IL-4p in chromatin immunoprecipitation (ChIP) assays and enhances c-Maf localization into promyelocytic leukemia nuclear bodies (PML-NBs) or nucleoli, respectively. Sumoylation of c-Maf and phosphorylation of p65 are increased in NOD CD4 cells compared to CD4 cells from diabetes-resistant B10.D2 mice, suggesting that increased c-Maf sumoylation and interaction with p65 contribute to immune deviation in T1D by reducing c-Maf access to and transactivation of the IL-4 gene. Islet specific CD4 cells expressing inhibitory receptors may be a useful therapeutic tool for treating T1D. Engagement of transgenic Ly49A inhibits CD4 cell activation and delays onset of T1D in mice. However, in vitro studies suggest the inhibitory effect of Ly49A is incomplete. Here we report that following simultaneous T cell receptor (TCR) and Ly49A engagement, phosphorylation of Zap70, Erk1/2 and c-Jun were significantly diminished. Kinetic studies indicated that Ly49A did not simply delay activation but had a long-lasting effect. In contrast, when only costimulatory signals were provided through CD28, Ly49A engagement did not block p38 MapK or Akt phosphorylation. Likewise, expression of the downstream targets Bcl-xl and Baff were unaffected. Together these data suggest that engagement of Ly49A selectively inhibits signals downstream of the TCR but spares those unique to CD28. These results suggest that when considering its use as an immunotherapy, the potency of inhibitory receptors such as Ly49A may be further improved by pairing them with costimulatory blockade. Take together, these studies suggest that abnormal post-translational regulation of c-Maf function is a novel marker of altered T cell function in T1D and use of inhibitory receptors such as Ly49A may be optimized combining this approach with other complementary therapies.