Microbial superantigens (SAGs) have been implicated in the pathogenesis of human autoimmune diseases. Preferential expansion of the Vveta7 T cell receptor positive T cell subset in patients suffering from acute-onset type I diabetes has indicated the presence of a surface membrane-bound SAG. Here, we have isolated a novel mouse mammary tumor virus-related human endogenous retrovirus. We further show that the N-terminal moiety of the envelope gene encodes an MHC class II-dependent SAG. We propose that expression of this SAG, induced in extrapancreatic and professional antigen-presenting cells, leads to beta-cell destruction via the systemic activation of autoreactive T cells. The SAG encoded by this novel retrovirus thus constitutes a candidate autoimmune gene in type I diabetes.