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Long non-coding RNAs (lncRNAs) are emerging as crucial regulators of {beta}-cell development and function. Consequently, the mis-expression of members of this group may contribute to the risk of type 2 diabetes (T2D). Here, we investigate roles for an antisense lncRNA expressed from the Pax6 locus (annotated as Pax6os1 in mice and PAX6-AS1 in humans) in {beta}-cell function. The transcription factor Pax6 is required for the development of pancreatic islets and maintenance of a fully differentiated {beta}-cell phenotype. Pax6os1/PAX6-AS1 expression was increased in pancreatic islets and {beta}-cell lines at high glucose concentrations, in islets from mice fed a high fat diet, and in those from patients with type 2 diabetes. Silencing or deletion of Pax6os1/PAX6-AS1 in MIN6 cells and EndoC-{beta}H1cells, respectively, upregulated {beta}-cell signature genes, including insulin. Moreover, shRNA-mediated silencing of PAX6-AS1 in human islets not only increased insulin mRNA, but also enhanced glucose-stimulated insulin secretion and calcium dynamics. In contrast, inactivation of Pax6os1 in mice was largely without effect on glucose homeostasis, though female Pax6os1 null mice on high fat diet (HFD) showed a tendency towards enhanced glucose clearance. Together, our results suggest that increased expression of PAX6-AS1 at high glucose levels may contribute to {beta}-cell dedifferentiation and failure in some forms of type 2 diabetes. Thus, targeting PAX6-AS1 may provide a promising strategy to enhance insulin secretion and improve glucose homeostasis in type 2 diabetes.