To determine the role of cholesterol synthesis in pancreatic b-cells, a transgenic model of in vivo activation of sterol-regulatory element binding protein 2 (SREBP-2) specifically in b-cells (TgRIP-SREBP-2) was developed and analyzed. Expression of nuclear human SREBP-2 in b-cells resulted in severe diabetes as evidenced by greater than 5-fold elevations in glycohemoglobin compared with C57BL/6 controls. Diabetes in TgRIP-SREBP-2 mice was primarily due to defects in glucose-and potassium-stimulated insulin secretion as determined by glucose tolerance test. Isolated islets of TgSREBP-2 mice were fewer in number, smaller, deformed, and had decreased insulin content. SREBP-2-expressing islets also contained increased esterified cholesterol and unchanged triglycerides with reduced ATP levels. Consistently, these islets exhibited elevated expression of HMG-CoA synthase and reductase and LDL receptor, with suppression of endogenous SREBPs. Genes involved in b-cell differentiation, such as PDX1 and BETA2, were suppressed, explaining loss of b-cell mass, whereas IRS2 expression was not affected. These phenotypes were dependent on the transgene expression. Taken Sterol-regulatory element binding protein 1c (SREBP-1c) is a membrane-bound transcription factor of the basic HLH (bHLH) leucine zipper family and has been established as a nutritional regulator of lipogenic enzymes in the liver (3, 4). Expression of SREBP-1c is highly upregulated by dietary intake of carbohydrates, sugars, and saturated FAs, whereas PUFAs, such as eicosapentaenoic acid, have been shown to inhibit hepatic SREBP-1c through multiple mechanisms (5, 6). These nutritional regulations of SREBP-1c are also observed in a cultured b-cell line and in isolated islets of mice (7,8). SREBP-1c also plays a role in insulin signaling by inhibiting insulin receptor substrate 2 (IRS-2), the major insulin-signaling mediator in the liver and in b-cells (9, 10).As a model for lipotoxicity by endogenous FAs in pancreatic b-cells, we previously developed transgenic mice overexpressing the active form of SREBP-1c under the insulin promoter expression (10). These mice exhibited impaired glucose tolerance in vivo due to both decreased b-cell mass and impaired insulin secretion estimated in isolated islets, which was enhanced by feeding the mice a high-fat, high-sucrose diet. The SREBP-1c-overexpressing islets had ATP depletion caused by enhanced lipogenesis and increased uncoupling protein 2 (UCP-2). Explaining the loss of b-cell mass, these islets had decreased expression of IRS-2 and PDX1. In addition to inhibition of GSIS,