Loss of pancreatic β-cell mass and function as a result of sustained endoplasmic reticulum (ER) stress is a core step in the pathogenesis of diabetes mellitus type 2. The complex control of β-cells and insulin production involves hedgehog signaling pathways as well as cholesterol-mediated effects. In fact, data from studies in humans and animal models suggest that HDL protects against the development of diabetes through inhibition of ER stress and β-cell apoptosis. We investigated the mechanism by which HDL inhibits ER stress and apoptosis induced by thapsigargin, a sarco/ER Ca 2+ -ATPase inhibitor, in β-cells of a rat insulinoma cell line, INS1e. We further explored effects on the hedgehog signaling receptor Smoothened (Smo) with pharmacologic agonists and inhibitors. Interference with sterol synthesis or efflux enhanced βcell apoptosis and abrogated the anti-apoptotic activity of HDL. During ER stress, HDL facilitated the efflux of specific oxysterols, including 24-hydroxycholesterol (24-OHC). Supplementation of reconstituted HDL with 24-OHC enhanced and-in cells lacking ATP-binding cassette transporter ABCG1 or the 24-OHC synthesizing enzyme CYP46A1-restored the protective activity of HDL. Inhibition of Smo countered the beneficial effects of HDL but also LDL, and Smo agonists decreased β-cell apoptosis in the absence of ABCG1 or CYP46A1. The translocation of the Smo-activated transcription factor gliomaassociated oncogene GLI-1 was inhibited by ER stress but restored by both HDL and 24-OHC. In conclusion, the protective effect of HDL to counter ER stress and β-cell death involves the transport, generation and mobilization of oxysterols for activation of the hedgehog signalling receptor Smo.