Pancreatic β-cells are responsible for insulin production, and loss of functional β-cell mass is now recognized as a critical step in the pathogenesis of both type 1 and type 2 diabetes. However, the factors controlling the life and death of the pancreatic β-cell have only started to be elucidated. Discovered as the top glucose-induced gene in a human islet microarray study 12 years ago, thioredoxin-interacting protein (TXNIP) has now emerged as such a key player in pancreatic β-cell biology. Since then, β-cell expression of TXNIP has been found to be tightly regulated by multiple factors and to be dramatically increased in diabetic islets. Elevated TXNIP levels induce β-cell apoptosis, whereas TXNIP deficiency protects against type 1 and type 2 diabetes by promoting β-cell survival. TXNIP interacts with and inhibits thioredoxin and thereby controls the cellular redox state, but it also belongs to the α-arrestin family of proteins and regulates a variety of metabolic processes. Most recently, TXNIP has been discovered to control β-cell microRNA expression, β-cell function, and insulin production. In this review, the current state of knowledge regarding regulation and function of TXNIP in the pancreatic β-cell and the implications for drug development are discussed.