Increasing evidence suggests that elevation of plasma fatty acids that often accompanies insulin resistance contributes to beta-cell insufficiency in obesity-related type 2 diabetes. Circulating levels of hepatocyte growth factor (HGF) are increased in humans with metabolic syndrome and obesity. HGF is known to protect beta-cells against streptozotocin and during islet engraftment. However, whether HGF is a beta-cell prosurvival factor in situations of excessive lipid supply has not been deciphered. Mice overexpressing HGF in the beta-cell [rat insulin type II promoter (RIP)-HGF transgenic mice] fed with standard chow display improved glucose homeostasis and increased beta-cell mass and proliferation compared with normal littermates. However, after 15 wk of high-fat feeding, glucose homeostasis and beta-cell expansion and proliferation are indistinguishable between normal and transgenic mice. Interestingly, RIP-HGF transgenic mouse beta-cells and normal beta-cells treated with HGF display increased sensitivity to palmitate-mediated apoptosis in vitro. Palmitate completely eliminates Akt and Bad phosphorylation in RIP-HGF transgenic mouse islets. HGF-overexpressing islets also show significantly decreased AMP-activated protein kinase-alpha and acetyl-coenzyme A carboxylase phosphorylation, diminished fatty acid oxidation, increased serine palmitoyltransferase expression, and enhanced ceramide formation compared with normal islets. Importantly, human islets overexpressing HGF also display increased beta-cell apoptosis in the presence of palmitate. Treatment of both mouse and human islet cells with the de novo ceramide synthesis inhibitors myriocin and fumonisin B1 abrogates beta-cell apoptosis induced by HGF and palmitate. Collectively, these studies indicate that HGF can be detrimental for beta-cell survival in an environment with excessive fatty acid supply.