Type 1 diabetes (T1D) is caused by immune-mediated destruction of insulin-producing β-cells. Insufficient control of autoreactive T cells by regulatory T cells (Tregs) is believed to contribute to disease pathogenesis, but changes in Treg function are difficult to quantify because of the lack of Treg-exclusive markers in humans and the complexity of functional experiments. We established a new way to track Tregs by using a gene signature that discriminates between Tregs and conventional T cells regardless of their activation states. The resulting 31-gene panel was validated with the NanoString nCounter platform and then measured in sorted CD4⁺CD25^hiCD127^lo Tregs from children with T1D and age-matched control subjects. By using biomarker discovery analysis, we found that expression of a combination of six genes, including TNFRSF1B (CD120b) and FOXP3, was significantly different between Tregs from subjects with new-onset T1D and control subjects, resulting in a sensitive (mean ± SD 0.86 ± 0.14) and specific (0.78 ± 0.18) biomarker algorithm. Thus, although the proportion of Tregs in peripheral blood is similar between children with T1D and control subjects, significant changes in gene expression can be detected early in disease process. These findings provide new insight into the mechanisms underlying the failure to control autoimmunity in T1D and might lead to a biomarker test to monitor Tregs throughout disease progression.