Glucagon-like peptide 1 (GLP-1) is a physiological stimulus of pancreatic beta-cell function. This enteroendocrine hormone is produced by intestinal L cells, and is delivered via the bloodstream to GLP-1 receptors (GLP-1Rs) on pancreatic beta-cells. In addition, there is evidence that beta-cell GLP-1Rs maintain sustained basal activity even in the absence of intestinal peptide, an observation that has raised the question whether these receptors have some degree of ligand-independent function. Here, we provide an alternative explanation for basal receptor activity based on our finding that biologically relevant amounts of fully processed GLP-1 are locally generated by insulinoma cell lines, as well as by alpha-cells of isolated rat islets in primary culture. Presence of GLP-1 was established by immunocytochemistry, as well as by selective ELISAs and bioassays of cell supernatants. A GLP-1R antagonist significantly reduced insulin secretion/production in beta-TC-6 insulinoma cells and isolated rat islets, suggesting a functionally important loop between locally produced GLP-1 and its cognate receptor. Treatment with this antagonist also inhibited the growth of beta-TC-6 cells. These observations provide novel insight into the function of insulin-producing cell lines and native beta-cells during in vitro culture, and they support the idea that locally produced GLP-1 may play a role in intra-islet regulation.