Loss of functional β‐cell mass caused by lipotoxicity is a key pathogenic factor in the development of type 2 diabetes mellitus (T2DM). We have previously reported that sphingosine kinase (SK)1 is an endogenous protector of β‐cells against lipotoxicity. The current study reports that SK2, another isoform of SK, is a crucial mediator of lipotoxicity in β‐cells. Exposure of β‐cells to palmitatic acid (PA), a saturated free fatty acid, resulted in a nearly 2‐fold increase in SK2 expression, which paralleled the induction of cell death in a similar dose‐ and time‐dependent fashion. Silencing SK2 expression by its specific small interfering RNAs significantly inhibited PA‐induced cell death and caspase‐3 activation, whereas overexpression of SK2 promoted lipotoxicity in β‐cells. Mechanistically, upon exposure to PA, endogenous SK2 was shuttled from the nucleus to the cytoplasm, where it interacted with B‐cell lymphoma–extra‐large (Bcl‐xL), leading to mitochondrial apoptotic pathway activation and cell death. By blocking SK2 translocation and its interaction with Bcl‐xL, either the nuclear export signal mutant (L423A/L425A) or the BH3 domain mutant (L219A) of SK2 significantly attenuated β‐cell lipotoxicity. Furthermore, SK2 deficiency in mice significantly prevented the loss of β‐cell mass, preserved insulin production, and ameliorated the diabetic phenotype in an established T2DM model induced by feeding a high‐fat diet accompanied by administration of streptozotocin. These findings provide the first evidence, in vitro and in vivo, of a critical role for SK2 in mediating β‐cell lipotoxicity and the progression of diabetes.—Song, Z., Wang, W., Li, N., Yan, S., Rong, K., Lan, T., Xia, P. Sphingosine kinase 2 promotes lipotoxicity in pancreatic β‐cells and the progression of diabetes. FASEB J. 33, 3636–3646 (2019). http://www.fasebj.org