Diabetes results from an inadequate mass of functional beta cells, due to either beta cell loss caused by immune assault or the lack of compensation to overcome insulin resistance. Elucidating the mechanisms that regulate beta cell mass has important ramifications for fostering beta cell regeneration and the treatment of diabetes. We report here that Skp2, a substrate recognition component of Skp1-Cul1-F-box (SCF) ubiquitin ligase, played an essential and specific role in regulating the cellular abundance of p27 and was a critical determinant of beta cell proliferation. In Skp2(-/-) mice, accumulation of p27 resulted in enlarged polyploid beta cells as a result of endoreduplication replacing proliferation. Despite beta cell hypertrophy, Skp2(-/-) mice exhibited diminished beta cell mass, hypoinsulinemia, and glucose intolerance. Increased insulin resistance resulting from diet-induced obesity caused Skp2(-/-) mice to become overtly diabetic, because beta cell growth in the absence of cell division was insufficient to compensate for increased metabolic demand. These results indicate that the Skp2-mediated degradation pathway regulating the cellular degradation of p27 is essential for establishing beta cell mass and to respond to increased metabolic demand associated with insulin resistance.