Glucotoxicity and lipotoxicity contribute to the impaired beta-cell function observed in type 2 diabetes. Here we examine the effect of saturated and monounsaturated fatty acids at different glucose concentrations on human beta-cell turnover and secretory function. Exposure of cultured human islets to saturated fatty acid and/or to an elevated glucose concentration for 4 days increased beta-cell DNA fragmentation and decreased beta-cell proliferation. In contrast, the monounsaturated palmitoleic acid or oleic acid did not affect DNA fragmentation and induced beta-cell proliferation. Moreover, each monounsaturated fatty acid prevented the deleterious effects of both palmitic acid and high glucose concentration. The cell-permeable ceramide analogue C(2)-ceramide mimicked both the palmitic acid-induced beta-cell apoptosis and decrease in proliferation. Furthermore, the ceramide synthetase inhibitor fumonisin B1 blocked the deleterious effects of palmitic acid on beta-cell turnover. In addition, palmitic acid decreased Bcl-2 expression and induced release of cytochrome c from the mitochondria into the cytosol, which was prevented by fumonisin B1 and by oleic acid. Finally, each monounsaturated fatty acid improved beta-cell secretory function that was reduced by palmitic acid and by high glucose. Thus, in human islets, the saturated palmitic acid and elevated glucose concentration induce beta-cell apoptosis, decrease beta-cell proliferation, and impair beta-cell function, which can be prevented by monounsaturated fatty acids. The deleterious effect of palmitic acid is mediated via formation of ceramide and activation of the apoptotic mitochondrial pathway, whereas Bcl-2 may contribute to the protective effect of monounsaturated fatty acids.