OBJECTIVE - Type 2 diabetes is often accompanied by abnormal blood lipid and lipoprotein levels, but most studies on the link between hyperlipidemia and diabetes have focused on free fatty acids (FFAs). In this study, we examined the relationship between cholesterol and insulin secretion from pancreatic β-cells that is independent of the effects of FFAs. RESEARCH DESIGN AND METHODS - Several methods were used to modulate cholesterol levels in intact islets and cultured β-cells, including a recently developed mouse model that exhibits elevated cholesterol but normal FFA levels. Acute and metabolic alteration of cholesterol was done using pharmacological reagents. RESULTS - We found a direct link between elevated serum cholesterol and reduced insulin secretion, with normal secretion restored by cholesterol depletion. We further demonstrate that excess cholesterol inhibits secretion by downregulation of metabolism through increased neuronal nitric oxide synthase dimerization. CONCLUSIONS - This direct effect of cholesterol on β-cell metabolism opens a novel set of mechanisms that may contribute to β-cell dysfunction and the onset of diabetes in obese patients.