Islet cell autoantigen 512 (ICA512)/IA-2 is a receptor tyrosine phosphatase-like protein associated with the insulin secretory granules (SGs) of pancreatic β-cells. Here, we show that exocytosis of SGs and insertion of ICA512 in the plasma membrane promotes the Ca2+-dependent cleavage of ICA512 cytoplasmic domain by μ-calpain. This cleavage occurs at the plasma membrane and generates an ICA512 cytosolic fragment that is targeted to the nucleus, where it binds the E3-SUMO ligase protein inhibitor of activated signal transducer and activator of transcription-y (PIASy) and up-regulates insulin expression. Accordingly, this novel pathway directly links regulated exocytosis of SGs and control of gene expression in β-cells, whose impaired insulin production and secretion causes diabetes.