Type 1 diabetes (T1D) results from T-cell mediated autoimmune destruction of insulin-producing beta cells. Early breaches in B cell tolerance are central to T1D progression in mouse and man. Conventional transgenic mouse models (VH125.Tg NOD) suggested that B cell specificity is a powerful driver of disease. However, the precise staging of B cell development is limited in the conventional IgM-only model by the inability to class-switch. To investigate the developmental fate and functional status of anti-insulin B cells in NOD mice, we generated a new model (VH125SD.NOD) in which anti-insulin VDJH125 is targeted to the IgH chain locus and recombines with endogenous Vk chains to produce fully functional BCRs. This single copy VH transgene generates a small (1–2%) population of class-switch-competent anti-insulin B cells. Tracking their developmental fate reveals that anti-insulin B cells are preferentially skewed into marginal and late transitional zones which are known to have increased sensitivity to innate signals and enhanced capacity for antigen-driven expansion. Functional studies demonstrate that VH125SD.NOD anti-insulin B cells are anergic to antibody production; however, proliferation in response to B cell mitogens remains intact, diabetes is accelerated, and autoaggressive T cell responses to islet epitopes are increased. These findings validate the power of BCR specificity to drive T1D in a new mouse model and highlight the pathogenic potential of coupling a critical beta cell autoepitope to pro-inflammatory B cell subsets. We believe these findings may have implications for the discovery of new therapeutic targets in sources of innate signals that enhance autoreactivity in these B cell subsets, such as gut microbiota.