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Type 1 diabetes is a polygenic disease that results in an autoimmune response directed against insulin-producing beta cells. PTPN2 is a known high-risk type 1 diabetes associated gene expressed in both immune- and pancreatic beta cells, but how genes affect the development of autoimmune diabetes is largely unknown. We employed CRISPR/Cas9 technology to generate a functional knockout of PTPN2 in human pluripotent stem cells (hPSC) followed by differentiating stem-cell-derived beta-like cells (sBC) and detailed phenotypical analyses. The differentiation efficiency of PTPN2 knockout (PTPN2 KO) sBC is comparable to wild-type (WT) control sBC. Global transcriptomics and protein assays revealed the increased expression of HLA Class I molecules in PTPN2 KO sBC at a steady state and upon exposure to proinflammatory culture conditions, indicating a potential for the increased immune recognition of human beta cells upon differential PTPN2 expression. sBC co-culture with autoreactive preproinsulin-reactive T cell transductants confirmed increased immune stimulations by PTPN2 KO sBC compared to WT sBC. Taken together, our results suggest that the dysregulation of PTPN2 expression in human beta cell may prime autoimmune T cell reactivity and thereby contribute to the development of type 1 diabetes. [ABSTRACT FROM AUTHOR]