Misfolded human islet amyloid polypeptide (hIAPP) in pancreatic islets is associated with the loss of insulin-secreting beta cells in type 2 diabetes. Insulin secretion impairment and cell apoptosis can be due to mitochondrial dysfunction in pancreatic beta cells. Currently, there is little information about the effect of hIAPP on mitochondrial function. In this study, we used INS-1E rat insulinoma beta cells as a model to investigate the role of mitochondria in hIAPP-induced apoptosis and the protective effects of phycocyanin (PC). We demonstrated that hIAPP induced apoptosis in INS-1E cells was associated with the disruption of mitochondrial function, as evidenced by ATP depletion, mitochondrial mass reduction, mitochondrial fragmentation and loss of mitochondrial membrane potential (ΔΨ_m). Further molecular analysis showed that hIAPP induced changes in the expression of Bcl-2 family members, release of cytochrome c and apoptosis-inducing factor (AIF) from mitochondria into cytosol, activation of caspases and cleavage of poly (ADP-ribose) polymerase. Interestingly, the hIAPP-induced mitochondrial dysfunction in INS-1E cells was effectively restored by co-treatment of PC. Moreover, there was crosstalk between the extrinsic and intrinsic apoptotic pathways as demonstrated by cleavage of Bid by caspase-8 in the apoptotic process triggered by hIAPP. Taken together, we demonstrated for the first time the involvement of mitochondrial dysfunction in hIAPP-induced INS-1E cell apoptosis. Attenuation of mitochondrial dysfunction provides a mechanism for the protective effects of PC.