Background: High fat diet-induced hyperglycemia and palmitate-stimulated apoptosis was prevented by specific inhibition of protein kinase C delta (PKCδ) in β-cells. To understand the role of PKCδ in more detail the impact of changes in PKCδ activity on proliferation and survival of insulin-secreting cells was analyzed under stress-free conditions. Methodology and Principal Findings: Using genetic and pharmacological approaches, the effect of reduced and increased PKCδ activity on proliferation, apoptosis and cell cycle regulation of insulin secreting cells was examined. Proteins were analyzed by Western blotting and by confocal laser scanning microscopy. Increased expression of wild type PKCδ (PKCδWT) significantly stimulated proliferation of INS-1E cells with concomitant reduced expression and cytosolic retraction of the cell cycle inhibitor p21 Cip1/WAF1. This nuclear extrusion was mediated by PKCδ-dependent phosphorylation of p21 Cip1/WAF1 at Ser146. In kinase dead PKCδ (PKCδKN) overexpressing cells and after inhibition of endogenous PKCδ activity by rottlerin or RNA interference phosphorylation of p21 Cip1/WAF1 was reduced, which favored its nuclear accumulation and apoptotic cell death of INS-1E cells. Human and mouse islet cells express p21 Cip1/WAF1 with strong nuclear accumulation, while in islet cells of PKCδWT transgenic mice the inhibitor resides cytosolic. Conclusions and Significance: These observations disclose PKCδ as negative regulator of p21 Cip1/WAF1, which facilitates proliferation of insulin secreting cells under stress-free conditions and suggest that additional stress-induced changes push PKCδ into its known pro-apoptotic role. © 2011 Ranta et al.