Prediabetic NOD mice exhibit hyperglucagonemia, possibly due to an intrinsic alpha cell defect. Here, we show that the expression of a potential glucagon inhibitor, the adenosine A1 receptor (Adora1), is gradually diminished in alpha cells of Non-Obese Diabetic (NOD) mice, autoantibody positive (AA+) and overtly Type 1 Diabetic (T1D) patients during the progression of disease. We demonstrated that islet inflammation was associated with loss of Adora1 expression through the alternative splicing of Adora1. Expression of the spliced variant (Adora1-Var) was upregulated in the pancreas of 12 wk old NOD vs. age matched NOD.B10 (non-diabetes susceptible) control mice and was detected in the pancreas of AA+ patients, but not control subjects or overtly diabetic patients, suggesting that inflammation drives the splicing of Adora1. We subsequently demonstrated that Adora1-Var expression was upregulated in the islets of NOD.B10 mice after exposure to inflammatory cytokines, and in the pancreas of NOD.SCID mice after adoptive transfer of activated autologous splenocytes. Adora1-Var encodes a dominant negative N-terminal truncated isoform of Adora1 that can heterodimerize with the wild-type isoform. The splicing of Adora1 and loss of Adora1 expression on alpha cells may explain the hyperglucagonemia observed in prediabetic NOD mice and may contribute to the pathogenesis of human T1D and NOD disease.