A connection between diet, obesity and diabetes exists in multiple species and is the basis of an escalating human health problem. The factors responsible provoke both insulin resistance and pancreatic beta cell dysfunction but remain to be fully identified. We report a combination of molecular events in human and mouse pancreatic beta cells, induced by elevated levels of free fatty acids or by administration of a high-fat diet with associated obesity, that comprise a pathogenic pathway to diabetes. Elevated concentrations of free fatty acids caused nuclear exclusion and reduced expression of the transcription factors FOXA2 and HNF1A in beta cells. This resulted in a deficit of GnT-4a glycosyltransferase expression in beta cells that produced signs of metabolic disease, including hyperglycemia, impaired glucose tolerance, hyperinsulinemia, hepatic steatosis and diminished insulin action in muscle and adipose tissues. Protection from disease was conferred by enforced beta cell-specific GnT-4a protein glycosylation and involved the maintenance of glucose transporter expression and the preservation of glucose transport. We observed that this pathogenic process was active in human islet cells obtained from donors with type 2 diabetes; thus, illuminating a pathway to disease implicated in the diet- and obesity-associated component of type 2 diabetes mellitus.