γ‐Aminobutyric acid (GABA) administration has been shown to increase β‐cell mass, leading to a reversal of type 1 diabetes in mice. Whether GABA has any effect on β cells of healthy and prediabetic/glucose‐intolerant obese mice remains unknown. In the present study, we show that oral GABA administration (ad libitum) to mice indeed increased pancreatic β‐cell mass, which led to a modest enhancement in insulin secretion and glucose tolerance. However, GABA treatment did not further increase insulin‐positive islet area in high fat diet‐fed mice and was unable to prevent or reverse glucose intolerance and insulin resistance. Mechanistically, whether in vivo or in vitro, GABA treatment increased β‐cell proliferation. In vitro, the effect was shown to be mediated via the GABAA receptor. Single‐cell RNA sequencing analysis revealed that GABA preferentially up‐regulated pathways linked to β‐cell proliferation and simultaneously down‐regulated those networks required for other processes, including insulin biosynthesis and metabolism. Interestingly, single‐cell differential expression analysis revealed GABA treatment gave rise to a distinct subpopulation of β cells with a unique transcriptional signature, including urocortin 3 (ucn3), wnt4, and hepacam2. Taken together, this study provides new mechanistic insight into the proliferative nature of GABA but suggests that β‐cell compensation associated with prediabetes overlaps with, and negates, its proliferative effects.—Untereiner, A., Abdo, S., Bhattacharjee, A., Gohil, H., Pourasgari, F., Ibeh, N., Lai, M., Batchuluun, B., Wong, A., Khuu, N., Liu, Y., Al Rijjal, D., Winegarden, N., Virtanen, C., Orser, B. A., Cabrera, O., Varga, G., Rocheleau, J., Dai, F. F., Wheeler, M. B. GABA promotes β‐cell proliferation, but does not overcome impaired glucose homeostasis associated with diet‐induced obesity. FASEB J. 33, 3968–3984 (2019). http://www.fasebj.org