Proliferation of pancreatic islet β cells is an important mechanism for self-renewal and for adaptive islet expansion. Increased expression of the Ink4a/Arf locus, which encodes the cyclin-dependent kinase inhibitor p16^INK4a and tumor suppressor p19^Arf, limits β-cell regeneration in aging mice, but the basis of β-cell Ink4a/Arf regulation is poorly understood. Here we show that Enhancer of zeste homolog 2 (Ezh2), a histone methyltransferase and component of a Polycomb group (PcG) protein complex, represses Ink4a/Arf in islet β cells. Ezh2 levels decline in aging islet β cells, and this attrition coincides with reduced histone H3 trimethylation at Ink4a/Arf, and increased levels of p16^INK4a and p19^Arf. Conditional deletion of β-cell Ezh2 in juvenile mice also reduced H3 trimethylation at the Ink4a/Arf locus, leading to precocious increases of p16^INK4a and p19^Arf. These mutant mice had reduced β-cell proliferation and mass, hypoinsulinemia, and mild diabetes, phenotypes rescued by germline deletion of Ink4a/Arf. β-Cell destruction with streptozotocin in controls led to increased Ezh2 expression that accompanied adaptive β-cell proliferation and re-establishment of β-cell mass; in contrast, mutant mice treated similarly failed to regenerate β cells, resulting in lethal diabetes. Our discovery of Ezh2-dependent β-cell proliferation revealed unique epigenetic mechanisms underlying normal β-cell expansion and β-cell regenerative failure in diabetes pathogenesis.