The discovery of uncoupling protein (UCP)-2, a ubiquitously expressed protein homologous to UCP-1, has raised the possibility that energy balance of cells might be regulated in tissues other than brown adipocytes. In normal pancreatic islets, UCP-2 is upregulated by leptin and is low in leptin-resistant islets of ZDF rats. To determine whether UCP-2 does, in fact, have uncoupling activity and, if so, whether such activity would favorably influence the abnormalities in leptin-unresponsive UCP-2-underexpressing islets of diabetic ZDF rats, we transferred the UCP-2 gene to the islets of diabetic ZDF rats and lean (+/+) ZDF control rats. Although ATP was reduced by 23% in both groups of islets, the ATP:ADP ratio increased by 42 and 141%, respectively. [3H]palmitate oxidation was increased by 50%, and [3H]glucose oxidation was 42-63% higher. Preproinsulin mRNA was 2.9-fold above control levels, and glucose-stimulated insulin secretion, which was negligible in control ZDF rat islets, was improved in UCP-2-overexpressing islets. The high fat content of the islets was not reduced, however. We conclude that UCP-2 has uncoupling function when overexpressed in leptin-insensitive islets and that its overexpression corrects the underexpression of the insulin gene and ameliorates glucose-stimulated insulin secretion, possibly by increasing the ATP:ADP ratio.