Free fatty acids (FFAs) are cytotoxic to pancreatic islet β-cells and play a crucial role in the diabetes disease process. A recent study revealed a down-regulation of transcription factor 2 (TCF2) levels during FFA-mediated cytotoxicity in pancreatic β-cells. However, its function during this process and the underlying mechanism remains unclear. In this study, treatment with palmitic acid (PA) at high levels (400 and 800 μM) decreased β-cell viability and TCF2 protein expression, along with the glucose-stimulated insulin secretion (GSIS). Western and RT-PCR analysis confirmed the positive regulatory effect of TCF2 on GSIS through promotion of the key regulators pancreatic duodenal homeobox-1 (PDX1) and glucose transporter 2 (GLUT2) in β-cells. In addition, both PI3K/AKT and MEK/ERK showed decreased expression in PA (800 μM)-treated β-cells. Overexpression of TCF2 could effectively restore the inhibitory effect of PA on the activation of PI3K/AKT and MEK/ERK as well as β-cell viability, simultaneously, inhibited PA-induced reactive oxygen species (ROS) generation. After blocking the PI3K/AKT and MAPK/ERK signals with their specific inhibitor, the effect of overexpressed TCF2 on β-cell viability and ROS production was obviously attenuated. Furthermore, a protective effect of TCF2 on GSIS by positive modulation of JNK-PDX1/GLUT2 signaling was also confirmed. Accordingly, our study has confirmed that TCF2 positively modulates insulin secretion and further inhibits ROS generation via the PI3K/AKT and MEK/ERK signaling pathways. Our work may provide a new therapeutic target to achieve prevention and treatment of diabetes.