Type 1 diabetes is an inflammatory state. Myeloid-derived suppressive cells (MDSCs) originate from immature myeloid cells and quickly expand to control host immunity during infection, inflammation, trauma, and cancer. This study presents an ex vivo procedure to develop MDSCs from bone marrow cells propagated from granulocyte–macrophage-colony-stimulating factor (GM-CSF), interleukin (IL)-6, and IL-1β cytokines expressing immature morphology and high immunosuppression of T-cell proliferation. The adoptive transfer of cytokine-induced MDSCs (cMDSCs) improved the hyperglycemic state and prolonged the diabetes-free survival of nonobese diabetic (NOD) mice with severe combined immune deficiency (SCID) induced by reactive splenic T cells harvested from NOD mice. In addition, the application of cMDSCs reduced fibronectin production in the renal glomeruli and improved renal function and proteinuria in diabetic mice. Moreover, cMDSCs use mitigated pancreatic insulitis to restore insulin production and reduce the levels of HbA1c. In conclusion, administering cMDSCs propagated from GM-CSF, IL-6, and IL-1β cytokines provides an alternative immunotherapy protocol for treating diabetic pancreatic insulitis and renal nephropathy.