On-Policy Self-Distillation without Any Supervision

Diffusion large language models (dLLMs) generate text by iteratively denoising a masked sequence, offering a parallel alternative to autoregressive models, but eliciting strong reasoning through post-training remains difficult: supervised fine-tuning is off-policy and suffers from exposure bias, while reinforcement learning gives only sparse, sequence-level rewards and is hard to apply without tractable sequence likelihoods. On-policy self-distillation (OPSD) offers a promising alternative, using one model as both student and teacher to provide dense, token-level, on-policy supervision, but its effectiveness hinges on giving the teacher privileged information (PI) - typically an instance-specific ground-truth reference unavailable at inference - so the student ends up distilling a weak PI-free consensus policy that yields little improvement on dLLM reasoning. We introduce dOPSD, which instead derives the teacher's privilege directly from the student's own denoising trajectory, evaluating masked positions using later, more-decoded steps of that same trajectory rather than an external label, so the teacher's advantage emerges from the model's own decoding process; on Dream and LLaDA, dOPSD improves both in-domain math reasoning and out-of-domain code generation, outperforming supervised and on-policy baselines.

On-policy distillation (OPD) and on-policy self-distillation (OPSD) have emerged as promising post-training methods for large language models, offering dense token-level supervision on trajectories sampled from the model's own policy. However, existing results on their effectiveness remain mixed: while OP(S)D has shown promise in system prompt and knowledge internalization, recent studies also report instability and degradation. In this work, we present a comprehensive empirical study of when OPD and OPSD work, when they fail, and why. We find that OPD on mathematical reasoning is highly sensitive to teacher choice and loss formulation, whereas OPSD fails in our tested settings due to test-time absence of instance-specific privileged information (PI). In contrast, OPSD is effective when PI represents a shared latent rule, such as a system prompt or alignment preference. We identify three failure mechanisms: (1) distribution mismatch between teacher and student caused by conditioning on student-generated prefixes, (2) optimization instability from biased TopK reverse-KL gradients, and (3) an OPSD-specific limitation where the student learns a PI-free policy that aggregates PI-conditioned teachers, which is insufficient when PI is instance-specific. We further show that stop-gradient TopK objectives, RLVR-adapted teachers, and SFT-stabilized students mitigate these failures.

On-policy self-distillation (OPSD) is a promising approach to improve reasoning language models, but it remains brittle in practice: making it work reliably often requires substantial engineering effort. We identify a structural source of this difficulty: vanilla OPSD is precisely the $β=1$ member of a broader policy-optimization family, where $β$ weights the KL penalty anchoring the student to a reference policy. This equivalence turns $β$ from an implicit value fixed at one into a controllable regularization parameter, yielding a more general formulation that trades off proximity to a reference policy against privileged teacher guidance. We introduce $β$-OPSD and derive its optimal policy as a geometric interpolation between the reference policy and the privileged teacher. Directly optimizing this objective with reinforcement learning, however, would be costly and high-variance. Rather than optimize the RL objective directly, we turn its closed-form solution into a distillation target. Each value of $β$ selects a target along the reference-to-teacher path, which we implement efficiently by mixing their token-level logits. In this way, inexpensive distillation approximates the solution of expensive policy optimization. Return-to-go credit assignment further aligns token updates with the sequence-level objective while retaining the simplicity of OPSD. Experiments on mathematical reasoning benchmarks show that $β$-OPSD consistently outperforms vanilla OPSD, improving optimization stability and downstream reasoning performance. Our results provide a principled route from self-distillation to policy optimization and back without sacrificing the efficiency that makes OPSD practical.