Diabetes mellitus is characterized by decreased insulin secretion and action. Decreased insulin secretion results from a reduction in pancreatic beta-cell mass and function. Apoptosis, oxidative stress, mitochondrial dysfunction, and ER stress responses including JNK activation have been suggested as mechanisms of the changes of pancreatic beta-cells in type 2 diabetes, however, the underlying causes were not clearly elucidated. Autophagy is an intracellular process that plays a crucial role in cellular homeostasis through degradation and recycling of organelles constitutively or in response to the environmental condition. We studied the role of autophagy in pancreatic beta-cells using mice with beta-cell-specific deletion of the Atg7 (autophagy-related 7) gene. Atg7-mutant mice showed increased apoptosis and decreased proliferation of beta-cells with resultant reduction in beta-cell mass. Pancreatic insulin content was decreased due to the decreased beta-cell mass and reduced number of insulin granules. Morphological analysis of beta-cells revealed accumulation of ubiquitinated proteins, swollen mitochondria, and distended ER. Insulin secretory function ex vivo was also impaired. As a result, autophagy-deficient mice showed hypoinsulinemia and hyperglycemia. These results suggest that autophagy is necessary to maintain structure, mass and function of pancreatic beta-cells. Here we discuss the significance of autophagy in pancreatic beta-cells with its potential relevance to the development of diabetes.