PTPN22 encodes the lymphoid tyrosine phosphatase (LYP) and is the second strongest non-HLA genetic risk factor for type 1 diabetes. The PTPN22 susceptibility allele generates an LYP variant with an arginine-to-tryptophan substitution at position 620 (R620W) that has been reported by several studies to impart a gain of function. However, a recent report investigating both human cells and a knockin mouse model containing the R620W homolog suggested that this variation causes faster protein degradation. Whether LYP R620W is a gain- or loss-of-function variant, therefore, remains controversial. To address this issue, we generated transgenic NOD mice (nonobese diabetic) in which Ptpn22 can be inducibly silenced by RNA interference. We found that Ptpn22 silencing in the NOD model replicated many of the phenotypes observed in C57BL/6 Ptpn22 knockout mice, including an increase in regulatory T cells. Notably, loss of Ptpn22 led to phenotypic changes in B cells opposite to those reported for the human susceptibility allele. Furthermore, Ptpn22 knockdown did not increase the risk of autoimmune diabetes but, rather, conferred protection from disease. Overall, to our knowledge, this is the first functional study of Ptpn22 within a model of type 1 diabetes, and the data do not support a loss of function for the PTPN22 disease variant.