Progressive beta-cell insufficiency in the pancreas is a hallmark of both types I and II diabetes, and agents that protect against beta-cell dysfunction are potential drug targets for diabetes mellitus. Pituitary adenylate cyclase-activating polypeptide (PACAP) is a strong secretagogue of insulin from pancreatic islets and is suggested to be involved in physiological blood glucose homeostasis and the pathology of diabetes. Recent studies in genetically engineered animal models have shown that PACAP stimulates pancreatic functions, especially in cooperation with other regulatory factors including glucose. Furthermore, chronic activation of PACAP signaling regulates pancreatic islet mass in a context-dependent manner. Accumulating in vivo and in vitro evidence suggest that PACAP has trophic effects and regulates both proliferation and cell viability of beta-cells and thereby contributes to protection against diabetes. This review focuses on such trophic actions of PACAP on pancreatic beta-cells and discusses the pathophysiological significance of pancreatic PACAP, with the aim to provide information for future development of treatment for diabetes.