Farnesoid X receptor (FXR) is highly expressed in liver and intestine where it controls bile acid (BA), lipid and glucose homeostasis. Here we show that FXR is expressed and functional, as assessed by target gene expression analysis, in human islets and β-cell lines. FXR is predominantly cytosolic-localized in the islets of lean mice, but nuclear in obese mice. Compared to FXR+/+ mice, FXR−/− mice display a normal architecture and β-cell mass but the expression of certain islet-specific genes is altered. Moreover, glucose-stimulated insulin secretion (GSIS) is impaired in the islets of FXR−/− mice. Finally, FXR activation protects human islets from lipotoxicity and ameliorates their secretory index.