Chronic palmitate exposure impairs glucose-stimulated insulin secretion and other aspects of β-cell function, but the underlying mechanisms are not known. Using various live-cell fluorescence imaging approaches, we show here that long-term palmitate treatment influences cAMP signaling in pancreatic β-cells. Glucose stimulation of mouse and human β-cells induced oscillations of the subplasma-membrane cAMP concentration, but after 48 h exposure to palmitate, most β-cells failed to increase cAMP in response to glucose. In contrast, GLP-1–triggered cAMP formation and glucose- and depolarization-induced increases in cytoplasmic Ca²⁺ concentration were unaffected by the fatty acid treatment. Insulin secretion from control β-cells was pulsatile, but the response deteriorated after long-term palmitate exposure. Palmitate-treated mouse islets showed reduced expression of adenylyl cyclase 9, and knockdown of this protein in insulinoma cells reduced the glucose-stimulated cAMP response and insulin secretion. We conclude that impaired glucose-induced generation of cAMP is an important determinant of defective insulin secretion after chronic palmitate exposure.