Type 2 diabetes (T2D) is a global pandemic. Genome-wide association studies (GWASs) have identified >100 genetic variants associated with the disease, including a common variant in the melatonin receptor 1 b gene (MTNR1B). Here, we demonstrate increased MTNR1B expression in human islets from risk G-allele carriers, which likely leads to a reduction in insulin release, increasing T2D risk. Accordingly, in insulin-secreting cells, melatonin reduced cAMP levels, and MTNR1B overexpression exaggerated the inhibition of insulin release exerted by melatonin. Conversely, mice with a disruption of the receptor secreted more insulin. Melatonin treatment in a human recall-by-genotype study reduced insulin secretion and raised glucose levels more extensively in risk G-allele carriers. Thus, our data support a model where enhanced melatonin signaling in islets reduces insulin secretion, leading to hyperglycemia and greater future risk of T2D. The findings also imply that melatonin physiologically serves to inhibit nocturnal insulin release.