Regulation of glucose homeostasis by insulin depends on pancreatic β-cell growth, survival, and function. Raf-1 kinase is a major downstream target of several growth factors that promote proliferation and survival of many cell types, including the pancreatic β cells. We have previously reported that insulin protects β cells from apoptosis and promotes proliferation by activating Raf-1 signaling in cultured human islets, mouse islets, and MIN6 cells. As Raf-1 activity is critical for basal apoptosis and insulin secretion in vitro, we hypothesized that Raf-1 may play an important role in glucose homeostasis in vivo. To test this hypothesis, we utilized the Cre-loxP recombination system to obtain a pancreatic β-cell-specific ablation of Raf-1 kinase gene (RIPCre(+/+):Raf-1(flox/flox)) and a complete set of littermate controls (RIPCre(+/+):Raf-1(wt/wt)). RIPCre(+/+):Raf-1(flox/flox) mice were viable, and no effects on weight gain were observed. RIPCre(+/+):Raf-1(flox/flox) mice had increased fasting blood glucose levels and impaired glucose tolerance but normal insulin tolerance compared to littermate controls. Insulin secretion in vivo and in isolated islets was markedly impaired, but there was no apparent effect on the exocytosis machinery. However, islet insulin protein and insulin 2 mRNA, but not insulin 1 mRNA, were dramatically reduced in Raf-1-knockout mice. Analysis of insulin 2 knockout mice demonstrated that this reduction in mRNA was sufficient to impair in vivo insulin secretion. Our data further indicate that Raf-1 specifically and acutely regulates insulin 2 mRNA via negative action on Foxo1, which has been shown to selectively control the insulin 2 gene. This work provides the first direct evidence that Raf-1 signaling is essential for the regulation of basal insulin transcription and the supply of releasable insulin in vivo.