The prion protein (PrPC), a mainly neuronal protein, is known to modulate glucose homeostasis in mouse models. We explored the underlying mechanism in mouse models and the human pancreatic β-cell line 1.1B4. We report expression of PrPC on mouse pancreatic β-cells, where it promoted uptake of iron through divalent-metal-transporters. Accordingly, pancreatic iron stores in PrP knockout mice (PrP-/-) were significantly lower than wild type (PrP+/+) controls. Silencing of PrPC in 1.1B4 cells resulted in significant depletion of intracellular (IC) iron, and remarkably, upregulation of glucose transporter GLUT2 and insulin. Iron overloading, on the other hand, resulted in downregulation of GLUT2 and insulin in a PrPC-dependent manner. Similar observations were noted in the brain, liver, and neuroretina of iron overloaded PrP+/+ but not PrP-/- mice, indicating PrPC-mediated modulation of insulin and glucose homeostasis through iron. Peripheral challenge with glucose and insulin revealed blunting of the response in iron-overloaded PrP+/+ relative to PrP-/- mice, suggesting that PrPC-mediated modulation of IC iron influences both secretion and sensitivity of peripheral organs to insulin. These observations have implications for Alzheimer's disease and diabetic retinopathy, known complications of type-2-diabetes associated with brain and ocular iron-dyshomeostasis.