Pancreatic β cell failure in type 2 diabetes is associated with functional abnormalities of insulin secretion and deficits of β cell mass. It's unclear how one begets the other. We have shown that loss of β cell mass can be ascribed to impaired FoxO1 function in different models of diabetes. Here we show that ablation of the three FoxO genes (1, 3a, and 4) in mature β cells results in early-onset, maturity-onset diabetes of the young (MODY)-like diabetes, with abnormalities of the MODY networks Hnf4α, Hnf1α, and Pdx1. FoxO-deficient β cells are metabolically inflexible, i.e., they preferentially utilize lipids rather than carbohydrates as an energy source. This results in impaired ATP generation and reduced Ca²⁺-dependent insulin secretion. The present findings demonstrate a secretory defect caused by impaired FoxO activity that antedates dedifferentiation. We propose that defects in both pancreatic β cell function and mass arise through FoxO-dependent mechanisms during diabetes progression.