The gastric hormone ghrelin and its receptor, growth hormone secretagogue receptor (GHSR), are expressed in pancreas. Here, we report that ghrelin is released from pancreatic islets to regulate glucose-induced insulin release. Plasma concentrations of ghrelin, as well as insulin, were higher in pancreatic veins than in arteries. GHSR antagonist and immunoneutralization of endogenous ghrelin enhanced glucose-induced insulin release from perfused pancreas, whereas exogenous ghrelin suppressed it. GHSR antagonist increased plasma insulin levels in gastrectomized and normal rats to a similar extent. Ghrelin knockout mice displayed enhanced glucose-induced insulin release from isolated islets, whereas islet density, size, insulin content, and insulin mRNA levels were unaltered. Glucose tolerance tests (GTTs) in ghrelin knockout mice showed increased insulin and decreased glucose responses. Treatment with high-fat diet produced glucose intolerance in GTTs in wild-type mice. In ghrelin knockout mice, the high-fat diet–induced glucose intolerance was largely prevented, whereas insulin responses to GTTs were markedly enhanced. These findings demonstrate that ghrelin originating from pancreatic islets is a physiological regulator of glucose-induced insulin release. Antagonism of the ghrelin function can enhance insulin release to meet increased demand for insulin in high-fat diet–induced obesity and thereby normalize glycemic control, which may provide a potential therapeutic application to counteract the progression of type 2 diabetes.