Early in the pathogenesis of type 2 diabetes mellitus (T2DM), dysregulated glucagon secretion from pancreatic α cells occurs prior to impaired glucose-stimulated insulin secretion (GSIS) from β cells. However, whether hyperglucagonemia is causally linked to β cell dysfunction remains unclear. Here we show that glucagon stimulates via cAMP-PKA-CREB signaling hepatic production of the neuropeptide kisspeptin1, which acts on β cells to suppress GSIS. Synthetic kisspeptin suppresses GSIS in vivo in mice and from isolated islets in a kisspeptin1 receptor-dependent manner. Kisspeptin1 is increased in livers and in serum from humans with T2DM and from mouse models of diabetes mellitus. Importantly, liver Kiss1 knockdown in hyperglucagonemic, glucose-intolerant, high-fat-diet fed, and Lepr^db/db mice augments GSIS and improves glucose tolerance. These observations indicate a hormonal circuit between the liver and the endocrine pancreas in glycemia regulation and suggest in T2DM a sequential link between hyperglucagonemia via hepatic kisspeptin1 to impaired insulin secretion.