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Granuphilin is a crucial component of the docking machinery of insulin-containing vesicles to the plasma membrane. Here, we show that the granuphilin promoter is a target of SREBP-1c, a transcription factor that controls fatty acid synthesis, and MafA, a beta cell differentiation factor. Potassium-stimulated insulin secretion (KSIS) was suppressed in islets with adenoviral-mediated overexpression of granuphilin and enhanced in islets with knockdown of granuphilin (in which granuphilin had been knocked down). SREBP-1c and granuphilin were activated in islets from beta cell-specific SREBP-1c transgenic mice, as well as in several diabetic mouse models and normal islets treated with palmitate, accompanied by a corresponding reduction in insulin secretion. Knockdown- or knockout-mediated ablation of granuphilin or SREBP-1c restored KSIS in these islets. Collectively, our data provide evidence that activation of the SREBP-1c/granuphilin pathway is a potential mechanism for impaired insulin secretion in diabetes, contributing to beta cell lipotoxicity.