Glucose stimulates both insulin secretion and hydrolysis of arachidonic acid (AA) esterified in membrane phospholipids of pancreatic islet beta-cells, and these processes are amplified by muscarinic agonists. Here we demonstrate that nonesterified AA regulates the biophysical activity of the pancreatic islet beta-cell-delayed rectifier channel, Kv2.1. Recordings of Kv2.1 currents from INS-1 insulinoma cells incubated with AA (5 mum) and subjected to graded degrees of depolarization exhibit a significantly shorter time-to-peak current interval than do control cells. AA causes a rapid decay and reduced peak conductance of delayed rectifier currents from INS-1 cells and from primary beta-cells isolated from mouse, rat, and human pancreatic islets. Stimulating mouse islets with AA results in a significant increase in the frequency of glucose-induced [Ca(2+)] oscillations, which is an expected effect of Kv2.1 channel blockade. Stimulation with concentrations of glucose and carbachol that accelerate hydrolysis of endogenous AA from islet phosphoplipids also results in accelerated Kv2.1 inactivation and a shorter time-to-peak current interval. Group VIA phospholipase A(2) (iPLA(2)beta) hydrolyzes beta-cell membrane phospholipids to release nonesterified fatty acids, including AA, and inhibiting iPLA(2)beta prevents the muscarinic agonist-induced accelerated Kv2.1 inactivation. Furthermore, glucose and carbachol do not significantly affect Kv2.1 inactivation in beta-cells from iPLA(2)beta(-/-) mice. Stably transfected INS-1 cells that overexpress iPLA(2)beta hydrolyze phospholipids more rapidly than control INS-1 cells and also exhibit an increase in the inactivation rate of the delayed rectifier currents. These results suggest that Kv2.1 currents could be dynamically modulated in the pancreatic islet beta-cell by phospholipase-catalyzed hydrolysis of membrane phospholipids to yield non-esterified fatty acids, such as AA, that facilitate Ca(2+) entry and insulin secretion.