Both stimulatory and detrimental effects of NEFAs (non-esterified fatty acids) on pancreatic β-cells have been recognized. Acute exposure of the pancreatic β-cell to high glucose concentrations and/or saturated NEFAs results in a substantial increase in insulin release, whereas chronic exposure results in desensitization and suppression of secretion, followed by induction of apoptosis. Some unsaturated NEFAs also promote insulin release acutely, but they are less toxic to β-cells during chronic exposure and can even exert positive protective effects. Therefore changes in the levels of NEFAs are likely to be important for the regulation of β-cell function and viability under physiological conditions. In addition, the switching between endogenous fatty acid synthesis or oxidation in the β-cell, together with alterations in neutral lipid accumulation, may have critical implications for β-cell function and integrity. Long-chain acyl-CoA (formed from either endogenously synthesized or exogenous fatty acids) controls several aspects of β-cell function, including activation of specific isoenzymes of PKC (protein kinase C), modulation of ion channels, protein acylation, ceramide formation and/or NO-mediated apoptosis, and transcription factor activity. In this review, we describe the effects of exogenous and endogenous fatty acids on β-cell metabolism and gene and protein expression, and have explored the outcomes with respect to insulin secretion and β-cell integrity.