Leptin inhibits insulin secretion from pancreatic β-cells, and in turn, insulin stimulates leptin biosynthesis and secretion from adipose tissue. Dysfunction of this adipoinsular feedback loop has been proposed to be involved in the development of hyperinsulinemia and type 2 diabetes mellitus. At the molecular level, leptin acts through various pathways, which in combination confer inhibitory effects on insulin biosynthesis and secretion. The aim of this study was to identify molecular mechanisms of leptin action on insulin secretion in pancreatic β-cells. To identify novel leptin-regulated genes, we performed subtraction PCR in INS-1 β-cells. Regulated expression of identified genes was confirmed by RT-PCR and Northern and Western blotting. Furthermore, functional impact on β-cell function was characterized by insulin-secretion assays, intracellular Ca²(+) concentration measurements, and enzyme activity assays. PP-1α, the catalytic subunit of protein phosphatase 1 (PP-1), was identified as a novel gene down-regulated by leptin in INS-1 pancreatic β-cells. Expression of PP-1α was verified in human pancreatic sections. PP-1α mRNA and protein expression is down-regulated by leptin, which culminates in reduction of PP-1 enzyme activity in β-cells. In addition, glucose-induced insulin secretion was inhibited by nuclear inhibitor of PP-1 and calyculin A, which was in part mediated by a reduction of PP-1-dependent calcium influx into INS-1 β-cells. These results identify a novel molecular pathway by which leptin confers inhibitory action on insulin secretion, and impaired PP-1 inhibition by leptin may be involved in dysfunction of the adipoinsular axis during the development of hyperinsulinemia and type 2 diabetes mellitus.