CAPS1 and CAPS2 regulate dense-core vesicle release of transmitters and hormones in neuroendocrine cells, but their precise roles in the secretory process remain enigmatic. Here we show that CAPS2(-/-) and CAPS1(+/-);CAPS2(-/-) mice, despite having increased insulin sensitivity, are glucose intolerant and that this effect is attributable to a marked reduction of glucose-induced insulin secretion. This correlates with diminished Ca(2+)-dependent exocytosis, a reduction in the size of the morphologically docked pool, a decrease in the readily releasable pool of secretory vesicles, slowed granule priming, and suppression of second-phase (but not first-phase) insulin secretion. In beta cells of CAPS1(+/-);CAPS2(-/-) mice, the lowered insulin content and granule numbers were associated with an increase in lysosome numbers and lysosomal enzyme activity. We conclude that although CAPS proteins are not required for Ca(2+)-dependent exocytosis to proceed, they exert a modulatory effect on insulin granule priming, exocytosis, and stability.