Fatty acids can favour the development of Type 2 diabetes by reducing insulin secretion and inducing apoptosis of pancreatic beta-cells. Here, we show that sustained exposure of the beta-cell line MIN6 or of isolated pancreatic islets to the most abundant circulating fatty acid palmitate increases the level of C/EBPbeta, an insulin transcriptional repressor. In contrast, two unsaturated fatty acids, oleate and linoleate were without effect. The induction of C/EBPbeta elicited by palmitate was prevented by inhibiting the ERK1/2 MAP kinase pathway or by reducing mitochondrial fatty acid oxidation with an inhibitor of Carnitine Palmitoyl Transferase-1. Overexpression of C/EBPbeta mimicked the detrimental effects of palmitate and resulted in a drastic reduction in insulin promoter activity, impairment in the capacity to respond to secretory stimuli and an increase in apoptosis. Our data suggest a potential involvement of C/EBPbeta as mediator of the deleterious effects of unsaturated free fatty acids on beta-cell function.