Preexisting maternal diabetes increases the risk of neural tube defects (NTDs). The mechanism underlying maternal diabetes-induced NTDs is not totally defined, and its prevention remains a challenge. Autophagy, an intracellular process to degrade dysfunction protein and damaged cellular organelles, regulates cell proliferation, differentiation and apoptosis. Because autophagy impairment causes NTDs reminiscent of those observed in diabetic pregnancies, we hypothesize that maternal diabetes-induced autophagy impairment causes NTD formation by disrupting cellular homeostasis leading to endoplasmic reticulum (ER) stress and apoptosis, and that restoration of autophagy by trehalose, a natural disaccharide, prevents diabetes-induced NTDs. Embryos from nondiabetic and type 1 diabetic mice fed with or without 2% or 5% trehalose water were used to assess markers of autophagy, ER stress and neurogenesis, numbers of autophagosomes, gene expression that regulates autophagy, NTD rates, indices of mitochondrial dysfunction, and neuroepithelial cell apoptosis. Maternal diabetes suppressed autophagy by significantly reducing LC3-II expression, autophagosome numbers and GFP-LC3 punctate foci in neuroepithelial cells, and by altering autophagy related gene expression. Maternal diabetes delayed neurogenesis by blocking Sox1 neural progenitor differentiation. Trehalose treatment reversed autophagy impairment and prevented NTDs in diabetic pregnancies. Trehalose resolved homeostatic imbalance by correcting mitochondrial defects, dysfunctional proteins, ER stress, apoptosis, and delayed neurogenesis in the neural tubes exposed to hyperglycemia. Our study demonstrates for the first time that maternal diabetes suppresses autophagy in neuroepithelial cells of the developing neural tube leading to NTD formation, and provides evidence for the potential efficacy of trehalose as an intervention against hyperglycemia-induced NTDs.