IGF-1 and insulin promote β-cell expansion by inhibiting β-cell death and stimulating β-cell proliferation, and the phosphatidylinositol (PI) 3-kinase/Akt pathway mediates insulin and IGF-1 action. Impaired β-cell expansion is a risk factor for type 2 diabetes. Here, we identified SH2B1, which is highly expressed in β-cells, as a novel regulator of β-cell expansion. Silencing of SH2B1 in INS-1 832/13 β-cells attenuated insulin- and IGF-1–stimulated activation of the PI 3-kinase/Akt pathway and increased streptozotocin (STZ)-induced apoptosis; conversely, overexpression of SH2B1 had the opposite effects. Activation of the PI 3-kinase/Akt pathway in β-cells was impaired in pancreas-specific SH2B1 knockout (PKO) mice fed a high-fat diet (HFD). HFD-fed PKO mice also had increased β-cell apoptosis, decreased β-cell proliferation, decreased β-cell mass, decreased pancreatic insulin content, impaired insulin secretion, and exacerbated glucose intolerance. Furthermore, PKO mice were more susceptible to STZ-induced β-cell destruction, insulin deficiency, and hyperglycemia. These data indicate that SH2B1 in β-cells is an important prosurvival and proproliferative protein and promotes compensatory β-cell expansion in the insulin-resistant state and in response to β-cell stress.