Type 2 diabetes (T2D) is characterized by a deficiency in β cell mass, increased β cell apoptosis, and extracellular accumulation of islet amyloid derived from islet amyloid polypeptide (IAPP), which β cells coexpress with insulin. IAPP expression is increased in the context of insulin resistance, the major risk factor for developing T2D. Human IAPP is potentially toxic, especially as membrane-permeant oligomers, which have been observed to accumulate within β cells of patients with T2D and rodents expressing human IAPP. Here, we determined that β cell IAPP content is regulated by autophagy through p62-dependent lysosomal degradation. Induction of high levels of human IAPP in mouse β cells resulted in accumulation of this amyloidogenic protein as relatively inert fibrils within cytosolic p62-positive inclusions, which temporarily averts formation of toxic oligomers. Mice hemizygous for transgenic expression of human IAPP did not develop diabetes; however, loss of β cell–specific autophagy in these animals induced diabetes, which was attributable to accumulation of toxic human IAPP oligomers and loss of β cell mass. In human IAPP–expressing mice that lack β cell autophagy, increased oxidative damage and loss of an antioxidant-protective pathway appeared to contribute to increased β cell apoptosis. These findings indicate that autophagy/lysosomal degradation defends β cells against proteotoxicity induced by oligomerization-prone human IAPP.