Quantitative variations in CTLA4 expression, due to genetic polymorphisms, are associated with various human autoimmune conditions, including type 1 diabetes (T1D). Extensive studies have demonstrated that CTLA4 is not only essential for the suppressive role of regulatory T (Treg) cells, but also required for intrinsic control of conventional T (Tconv) cells. We report that a modest insufficiency of CTLA4 in mice, which mimics the effect of some human CTLA4 genetic polymorphisms, accompanied by a T1D-permissive MHC locus, was sufficient to induce juvenile-onset diabetes on an otherwise T1D-resistant genetic background. Reduction in CTLA4 levels had an unanticipated effect in promoting Treg cell function both in vivo and in vitro. It led to an increase in Treg memory in both lymphoid and nonlymphoid target tissue. Conversely, modulating CTLA4 by either RNAi or antibody blockade promoted effector memory (TEM) formation in the Tconv compartment. The CD4+ TEM cells, including those within target tissue, produced IL17 or IFNγ. Blocking IL7 signaling reduced the Th17 autoimmune compartment, but did not suppress the T1D induced by CTLA4 insufficiency. Enhanced effector memory formation in both Tconv and Treg lineages may underpin the apparently dichotomized impact of CTLA4 insufficiency on autoimmune pathogenesis. Therefore, while the presence of CTLA4 plays a critical role in controlling homeostasis of T cells, its quantitative variation may impose diverse or even opposing effects on distinct lineages of T cells, an optimal sum of which is necessary for preservation of T-cell immunity while suppressing tissue damage.