Pulmonary emphysema and type 2 diabetes mellitus (T2DM), both caused by lifestyle factors, frequently concur. Respectively, the diseases affect lung alveolar and pancreatic islet cells, which express cell adhesion molecule 1 (CADM1), an immunoglobulin superfamily member. Protease-mediated ectodomain shedding of full-length CADM1 produces C-terminal fragments (CTFs) with proapoptotic activity. In emphysematous lungs, the CADM1 shedding rate and thus the level of CTFs in alveolar cells increase. In this study, CADM1 expression in islet cells was examined by western blotting. Protein was extracted from formalin-fixed, paraffin-embedded sections of pancreata isolated from patients with T2DM (n = 12) or from patients without pancreatic disease (n = 8) at autopsy. After adjusting for the number of islet cells present in the adjacent section, we found that full-length CADM1 decreased in T2DM islets, while ectodomain shedding increased. Hemoglobin A1c levels, measured when patients were alive, correlated inversely with full-length CADM1 levels (P = 0.041) and positively with ectodomain shedding rates (P = 0.001). In immunofluorescence images of T2DM islet cells, CADM1 was detected in the cytoplasm, but not on the cell membrane. Consistently, when MIN6-m9 mouse beta cells were treated with phorbol ester and trypsin to induce shedding, CADM1 immunostaining was diffuse in the cytoplasm. When a form of CTFs was exogenously expressed in MIN6-m9 cells, it localized diffusely in the cytoplasm and increased the number of apoptotic cells. These results suggest that increased CADM1 ectodomain shedding contributes to blood glucose dysregulation in T2DM by decreasing full-length CADM1 and producing CTFs that accumulate in the cytoplasm and promote apoptosis of beta cells. Thus, this study has identified a molecular alteration shared by pulmonary emphysema and T2DM.