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Insulin secretion from pancreatic beta cells is dependent on maturation and acidification of the secretory granule, processes necessary for prohormone convertase cleavage of proinsulin. Previous studies in isolated beta cells revealed that acidification may be dependent on the granule membrane chloride channel ClC-3, in a step permissive for a regulated secretory response. In this study, immuno-EM of beta cells revealed colocalization of ClC-3 and insulin on secretory granules. Clcn3(-/-) mice as well as isolated islets demonstrate impaired insulin secretion; Clcn3(-/-) beta cells are defective in regulated insulin exocytosis and granular acidification. Increased amounts of proinsulin were found in the majority of secretory granules in the Clcn3(-/-) mice, while in Clcn3(+/+) cells, proinsulin was confined to the immature secretory granules. These results demonstrate that in pancreatic beta cells, chloride channels, specifically ClC-3, are localized on insulin granules and play a role in insulin processing as well as insulin secretion through regulation of granular acidification.