Prediabetic NOD mice exhibit hyperglucagonemia, possibly due to an intrinsic α-cell defect. Here, we show that the expression of a potential glucagon inhibitor, the adenosine A1 receptor (Adora1), is gradually diminished in α-cells of NOD mice, autoantibody-positive (AA(+)) and overtly type 1 diabetic (T1D) patients during the progression of disease. We demonstrated that islet inflammation was associated with loss of Adora1 expression through the alternative splicing of Adora1. Expression of the spliced variant (Adora1-Var) was upregulated in the pancreas of 12-week-old NOD versus age-matched NOD.B10 (non-diabetes-susceptible) control mice and was detected in the pancreas of AA(+) patients but not in control subjects or overtly diabetic patients, suggesting that inflammation drives the splicing of Adora1. We subsequently demonstrated that Adora1-Var expression was upregulated in the islets of NOD.B10 mice after exposure to inflammatory cytokines and in the pancreas of NOD.SCID mice after adoptive transfer of activated autologous splenocytes. Adora1-Var encodes a dominant-negative N-terminal truncated isoform of Adora1. The splicing of Adora1 and loss of Adora1 expression on α-cells may explain the hyperglucagonemia observed in prediabetic NOD mice and may contribute to the pathogenesis of human T1D and NOD disease.