Altered regulation of insulin secretion by glucose is characteristic of individuals with type 2 diabetes mellitus, although the mechanisms that underlie this change remain unclear. We have now generated mice that lack the lambda isoform of PKC in pancreatic beta cells (betaPKClambda(-/-) mice) and show that these animals manifest impaired glucose tolerance and hypoinsulinemia. Furthermore, insulin secretion in response to high concentrations of glucose was impaired, whereas the basal rate of insulin release was increased, in islets isolated from betaPKClambda(-/-) mice. Neither the beta cell mass nor the islet insulin content of betaPKClambda(-/-) mice differed from that of control mice, however. The abundance of mRNAs for Glut2 and HNF3beta was reduced in islets of betaPKClambda(-/-) mice, and the expression of genes regulated by HNF3beta was also affected (that of Sur1 and Kir6.2 genes was reduced, whereas that of hexokinase 1 and hexokinase 2 genes was increased). Normalization of HNF3beta expression by infection of islets from betaPKClambda(-/-) mice with an adenoviral vector significantly reversed the defect in glucose-stimulated insulin secretion. These results indicate that PKClambda plays a prominent role in regulation of glucose-induced insulin secretion by modulating the expression of genes important for beta cell function.