How the processes of thymocyte deletion versus regulatory T (Treg) cell differentiation bifurcate and their relative importance for tolerance remains unclear. We addressed these questions by removing a critical mediator of thymocyte deletion, Bim, in the non-obese diabetic mouse model of type 1 autoimmune diabetes. Despite substantial defects in the deletion of autoreactive thymocytes, Bim deficient NOD (NODBim-/-) mice developed less insulitis and were protected from diabetes. Bim deficiency did not impair effector T cell function, however, NODBim-/- mice had increased numbers of Tregs in the thymus and peripheral lymphoid tissues, many of which expressed self-reactive TCRs. Increased levels of Nur77, CD5, GITR and phosphorylated I-kB in thymocytes from NODBim-/- mice suggest that autoreactive cells receiving TCR signals that would normally delete them ‘escape’ apoptosis and are diverted into the Treg pathway. Paradoxically, in the NOD model, reduced thymic deletion ameliorates autoimmune diabetes by increasing Tregs.