Type 2 diabetes is a major health problem worldwide, and one of its key features is the inability of elevated glucose to stimulate the release of sufficient amounts of insulin from pancreatic beta cells to maintain normal blood glucose levels. New therapeutic strategies to improve beta cell function are therefore believed to be beneficial. Here we demonstrate that the short-chain fatty acid receptors FFA2 (encoded by FFAR2) and FFA3 (encoded by FFAR3) are expressed in mouse and human pancreatic beta cells and mediate an inhibition of insulin secretion by coupling to Gi-type G proteins. We also provide evidence that mice with dietary-induced obesity and type 2 diabetes, as compared to non-obese control mice, have increased local formation by pancreatic islets of acetate, an endogenous agonist of FFA2 and FFA3, as well as increased systemic levels. This elevation may contribute to the insufficient capacity of beta cells to respond to hyperglycemia in obese states. Indeed, we found that genetic deletion of both receptors, either on the whole-body level or specifically in pancreatic beta cells, leads to greater insulin secretion and a profound improvement of glucose tolerance when mice are on a high-fat diet compared to controls. On the other hand, deletion of Ffar2 and Ffar3 in intestinal cells did not alter glucose tolerance in diabetic animals, suggesting these receptors act in a cell-autonomous manner in beta cells to regulate insulin secretion. In summary, under diabetic conditions elevated acetate acts on FFA2 and FFA3 to inhibit proper glucose-stimulated insulin secretion, and we expect antagonists of FFA2 and FFA3 to improve insulin secretion in type 2 diabetes.