Hypoxia-inducible factor-1α (HIF-1α) is a transcription factor that regulates cellular stress responses. While the levels of HIF-1α protein are tightly regulated, recent studies suggest that it can be active under normoxic conditions. We hypothesized that HIF-1α is required for normal β cell function and reserve and that dysregulation may contribute to the pathogenesis of type 2 diabetes (T2D). Here we show that HIF-1α protein is present at low levels in mouse and human normoxic β cells and islets. Decreased levels of HIF-1α impaired glucose-stimulated ATP generation and β cell function. C57BL/6 mice with β cell–specific Hif1a disruption (referred to herein as β-Hif1a-null mice) exhibited glucose intolerance, β cell dysfunction, and developed severe glucose intolerance on a high-fat diet. Increasing HIF-1α levels by inhibiting its degradation through iron chelation markedly improved insulin secretion and glucose tolerance in control mice fed a high-fat diet but not in β-Hif1a-null mice. Increasing HIF-1α levels markedly increased expression of ARNT and other genes in human T2D islets and improved their function. Further analysis indicated that HIF-1α was bound to the Arnt promoter in a mouse β cell line, suggesting direct regulation. Taken together, these findings suggest an important role for HIF-1α in β cell reserve and regulation of ARNT expression and demonstrate that HIF-1α is a potential therapeutic target for the β cell dysfunction of T2D.