Uncoupling protein 2 (UCP2) may act as an important regulator of insulin secretion. In this study, β-cell function in UCP2-deficient mice was examined after a 45% high-fat diet (HFD) to assess its role during the development of diet-induced type 2 diabetes. HFD-fed UCP2 (−/−) mice have lower fasting blood glucose and elevated insulin levels when compared with wild-type (WT) mice. UCP2 (−/−) mice also have enhanced β-cell glucose sensitivity compared with WT mice after HFD, a result that is due in part to the deterioration of glucose responsiveness in WT mice. HFD-fed UCP2 (−/−) mice have increased insulin secretory capacity as a result of increased pancreatic β-cell mass and insulin content per islet. Islets from WT mice exposed to 0.5 mmol/l palmitate for 48 h have significantly reduced mitochondrial membrane potential, ATP concentrations, and glucose responsiveness compared with UCP2 (−/−) islets, suggesting that elevated UCP2 in WT mice increases proton leak and decreases mitochondrial ATP production. Highly increased carnitine palmitoyl transferase-1 gene expression in UCP2 (−/−) mice is suggestive of enhanced fatty acid oxidizing capacity, particularly after HFD stress. These results further establish UCP2 as a component in glucose sensing and suggest a possible new aspect of UCP2 function during the progression of type 2 diabetes.