The beta-cell is a highly specialized cell with a unique differentiation that optimizes glucose-induced insulin secretion (GIIS). Here, we evaluated changes in gene expression that accompany beta-cell dysfunction in the db/db mouse model of type 2 diabetes. In db/db islets, mRNA levels of many genes implicated in beta-cell glucose sensing were progressively reduced with time, as were several transcription factors important for the maintenance of beta-cell differentiation. Conversely, genes normally suppressed in beta-cells, such as a variety of stress response mediators and inhibitor of differentiation/DNA binding 1, a gene capable of inhibiting differentiation, were markedly increased. We assessed whether this global alteration in the pattern of beta-cell gene expression was related more to chronic hyperglycemia or hyperlipidemia; db/db mice were treated with phlorizin, which selectively lowered plasma glucose, or bezafibrate, which selectively lowered plasma lipids. GIIS as well as the majority of the changes in gene expression were completely normalized by lowering glucose but were unaffected by lowering lipids. However, the restoration of GIIS was not accompanied by normalized uncoupling protein 2 or peroxisome proliferator-activated receptor gamma mRNA levels, which were upregulated in db/db islets. These studies demonstrate that hyperglycemia, independent of plasma lipid levels, is sufficient for the loss of beta-cell differentiation and secretory function in db/db mice.