Type 1 diabetes (T1D) is an autoimmune disease caused by destruction of insulin-producing β cells. The response of autoreactive T cells to β cell antigens plays a central role in the development of T1D. Recently, fusion peptides composed by insulin C-peptide fragments and other proteins were reported as β cell target antigens for diabetogenic CD4 T cells in non-obese diabetic (NOD) mice. In this study, we generated a T cell-receptor (TCR)-like monoclonal antibody (mAb) against a fusion peptide bound to major histocompatibility complex (MHC) class II component to elucidate the function of the fusion peptides in T1D. In addition, we developed a novel NFAT-GFP TCR reporter system to evaluate the TCR-like mAb. The NFAT-GFP reporter T cells expressing the diabetogenic TCR were specifically activated by the fusion peptide presented on the MHC class II molecules. By using the NFAT-GFP reporter T cells, we showed that the TCR-like mAb blocks the diabetogenic T cell response against the fusion peptide presented on the MHC class II molecules. Furthermore, the development of T1D was ameliorated when pre-diabetic NOD mice were treated with this mAb. These findings suggest that NFAT-GFP reporter T cells are useful to assess the function of specific TCR and the recognition of fusion peptides by T cells is crucial for the pathogenesis of T1D.