Activated T‐regulatory cells (aTregs) prevent or halt various forms of autoimmunity. We show that type 1 diabetics (T1D) have a Treg activation defect through an increase in resting Tregs (rTregs, CD4⁺CD25⁺Foxp3⁺CD45RA) and decrease in aTregs (CD4⁺CD25⁺Foxp3⁺CD45RO) (n= 55 T1D, n=45 controls, P=0.01). The activation defect persists life long in T1D subjects (T1D=45, controls=45, P=0.01, P=0.04). Lower numbers of aTregs had clinical significance because they were associated with a trend for less residual C‐peptide secretion from the pancreas (P=0.08), and poorer HbA1C control (P=0.03). In humans, the tumor necrosis factor receptor 2 (TNFR2) is obligatory for Treg induction, maintenance and expansion of aTregs. TNFR2 agonism is a method for stimulating Treg conversion from resting to activated. Using two separate in vitro expansion protocols, TNFR2 agonism corrected the T1D activation defect by triggering conversion of rTregs into aTregs (n=54 T1D, P<0.001). TNFR2 agonism was superior to standard protocols and TNF in proliferating Tregs. In T1D, TNFR2 agonist‐expanded Tregs were homogeneous and functionally potent by virtue of suppressing autologous cytotoxic T cells in a dose‐dependent manner comparable to controls. Targeting the TNFR2 receptor for Treg expansion in vitro demonstrates a means to correct the activation defect in T1D.