Hedgehog interacting protein (Hhip) is essential for islet formation and beta-cell proliferation during pancreatic development; abnormally elevated Hhip expression has been linked to human pancreatitis. Here, we investigate the role of Hhip in modulating insulin secretion in adult Hhip mice (Hhip +/- vs. Hhip+/+) fed high fat diets (HFD). Both sexes of HFD-Hhip +/+ mice developed impaired glucose intolerance, that was only ameliorated in male HFD-Hhip +/- mice that had high levels of circulating plasma insulin, but not in female HFD-Hhip +/- mice. HFD stimulated Hhip gene expression, mainly in beta cells. Male HFD-Hhip +/+ mice had more large islets in which insulin content was reduced; islet architecture was disordered; and markers of oxidative stress (8-OHdG and Nox 2) were increased. In contrast, male HFD-Hhip +/- mice had more small islets with increased beta cell proliferation, enhanced GSIS, less oxidative stress and preserved islet integrity. In vitro, recombinant Hhip increased Nox2 and NADPH activity and decreased insulin-positive beta cells. siRNA-Hhip increased GSIS and abolished the stimulation of sodium palmitate (PA)-BSA on Nox2 gene expression. We conclude that pancreatic Hhip gene inhibits insulin secretion by altering islet integrity and promoting Nox2 gene expression in beta cells in response to HDF-mediated beta cell dysfunction, a novel finding.