Aging associates with impaired pancreatic islet function and increased type 2 diabetes (T2D) risk. Here we examine whether age-related epigenetic changes affect human islet function and if blood-based epigenetic biomarkers reflect these changes and associate with future T2D. We analyse DNA methylation genome-wide in islets from 87 non-diabetic donors, aged 26-74 years. Aging associates with increased DNA methylation of 241 sites. These sites cover loci previously associated with T2D, for example, KLF14. Blood-based epigenetic biomarkers reflect age-related methylation changes in 83 genes identified in human islets (for example, KLF14, FHL2, ZNF518B and FAM123C) and some associate with insulin secretion and T2D. DNA methylation correlates with islet expression of multiple genes, including FHL2, ZNF518B, GNPNAT1 and HLTF. Silencing these genes in β-cells alter insulin secretion. Together, we demonstrate that blood-based epigenetic biomarkers reflect age-related DNA methylation changes in human islets, and associate with insulin secretion in vivo and T2D.