Type 2 diabetes is hallmarked by insulin resistance and insufficient β-cell function. Islets of type 2 diabetes patients have been shown to have decreased hypoxia-inducible factor (HIF)-1α/β expression. Target genes of the HIF pathway are involved in angiogenesis, survival, proliferation, and energy metabolism, and von Hippel-Lindau protein (VHL) is a negative regulator of this pathway. We hypothesized that increased HIF-mediated gene transcription by VHL deletion in the β-cells would increase β-cell mass and function. We generated β-cell-specific VHL-knockout mice using the Cre-loxP recombination system driven by the rat insulin promoter to assess the role of VHL in glucose homeostasis and β-cell function. VHL deletion in the pancreatic β-cells led to impaired glucose tolerance due to defects in glucose-stimulated insulin secretion and β-cell mass with age. VHL-knockout islets had decreased GLUT2, but increased glucose transporter 1 and vascular endothelial growth factor expression. Furthermore, there were significant aberrations in islet morphology in the VHL-knockout mice, likely due to increased islet vasculature. Given that erythropoietin (EPO) is a target gene of the HIF pathway, which is not expressed in islets, we tested whether activating EPO signaling by systemic administration with recombinant human EPO (rHuEPO) can overcome the β-cell defects that occurred with VHL loss. We observed improved glucose tolerance and restoration of GLUT2 expression in VHL-deficient β-cells in response to rHuEPO. Contrary to our hypothesis, loss of VHL and increased transcription of HIF-target genes resulted in impaired β-cell function and mass, which can be overcome with exogenous EPO. Our results indicate a critical role for VHL in β-cell function and mass, and that EPO administration improved β-cell function making it a potential strategy for diabetes treatment.