The phosphoprotein enriched in diabetes/phosphoprotein enriched in astrocytes (ped/pea-15) gene is overexpressed in human diabetes and causes this abnormality in mice. Transgenic mice with β-cell-specific overexpression of ped/pea-15 (β-tg) exhibited decreased glucose tolerance but were not insulin resistant. However, they showed impaired insulin response to hyperglycemia. Islets from the β-tg also exhibited little response to glucose. mRNAs encoding the Sur1 and Kir6.2 potassium channel subunits and their upstream regulator Foxa2 were specifically reduced in these islets. Overexpression of PED/PEA-15 inhibited the induction of the atypical protein kinase C (PKC)-ζ by glucose in mouse islets and in β-cells of the MIN-6 and INS-1 lines. Rescue of PKC-ζ activity elicited recovery of the expression of the Sur1, Kir6.2, and Foxa2 genes and of glucose-induced insulin secretion in PED/PEA-15-overexpressing β-cells. Islets from ped/pea-15-null mice exhibited a twofold increased activation of PKC-ζ by glucose; increased abundance of the Sur1, Kir6.2, and Foxa2 mRNAs; and enhanced glucose effect on insulin secretion. In conclusion, PED/PEA-15 is an endogenous regulator of glucose-induced insulin secretion, which restrains potassium channel expression in pancreatic β-cells. Overexpression of PED/PEA-15 dysregulates β-cell function and is sufficient to impair glucose tolerance in mice. © 2007 by the American Diabetes Association.