Influx of excess fatty acids and the resultant accumulation of intracellular triglycerides are linked to impaired insulin secretion and action in the pathogenesis of type 2 diabetes. Sterol regulatory element-binding protein (SREBP)-1c is a transcription factor that controls cellular synthesis of fatty acids and triglycerides. SREBP-1c is highly expressed in high-energy and insulin-resistant states. To investigate effects of this synthetic lipid regulator on insulin secretion, we generated transgenic mice overexpressing nuclear SREBP-1c under the insulin promoter. beta-Cell-specific expression of SREBP-1c caused reduction in islet mass and impaired glucose-stimulated insulin secretion and was associated with accumulation of triglycerides, suppression of pancreas duodenal homeobox-1, and upregulation of uncoupling protein 2 gene expression. The mice presented with impaired glucose tolerance that was exacerbated by a high-energy diet. Taken together with enhanced insulin secretion from SREBP-1-null islets, these data suggest that SREBP-1c and endogenous lipogenesis could be involved in beta-cell dysfunction and diabetes.