New Onset of Type 1 Diabetes Mycophenolate Mofetil-Daclizumab Clinical Trial

Design of Study: The study is a multi-center, three-arm, randomized, double-masked, placebo-controlled clinical trial. Comparisons will be made among the three groups, which are: * Mycophenolate mofetil active drug with Daclizumab (DZB) placebo IV * Mycophenolate mofetil active drug with active Daclizumab IV * Mycophenolate mofetil placebo with Daclizumab placebo IV Participants that agree to enroll in the study will be asked to take study medications for two years. MMF is given by mouth twice a day. DZB is given by an intravenous infusion twice, once at the time of enrollment and again two weeks later. Both these medications are approved by the U.S. Food and Drug Administration and are used by people who have received an organ transplant. This study is testing a new use of these medications to preserve insulin secretion by delaying or stopping further destruction of insulin-secreting cells in people with newly diagnosed type 1 diabetes. Both MMF and DZB make the immune system less active. Participants will be monitored closely for any possible side effects that can occur from taking either DZB and/or MMF due to decreased activity of the immune system. Participants will need to go to the Clinical Center for visits and tests. For the first month participants will come in every week; then participants will come in at month 2 and month 3. After the month 3 visit, visits will occur about every three months. At most visits, blood will be drawn and participants will meet with a study physician to review their overall diabetes management, and be monitored for any possible side-effects from the study medication. Participants will be asked to do a longer test called a Mixed Meal Tolerance Test (MMTT) at the initial visit and at five additional visits while taking the assigned study medication. The MMTT involves drinking a special drink which has a controlled amount of carbohydrates, protein, and fat to measure residual insulin secretion. The test requires having an IV inserted into the arm and having blood samples taken from the IV over a period of 2 to 4 hours. After completing the two year period of taking the study medication, participants will be asked to return every 3-6 months for an additional 1-2 years to evaluate their ability to secrete insulin after discontinuing the study medication.