Islet fibrosis, pancreatic beta-cell dysfunction, and beta-cell apoptosis are features of pancreatic diabetes and type 2 diabetes; however, the underlying mechanisms remain largely unknown. We hypothesized that pancreatic stellate cells (PSCs), a major profibrogenic cell type in the pancreas, might affect the phenotype of pancreatic beta-cells. alpha-Smooth muscle actin (a marker of activated PSC)-positive cells were found within and around the fibrotic islets. Indirect co-culture with PSCs reduced insulin expression and induced apoptosis in RIN-5F pancreatic beta-cells. Induction of beta-cell apoptosis was associated with activation of the caspase pathway and mitochondrial depolarization. Diphenylene iodonium, an inhibitor of PSC activation, inhibited islet fibrosis and protected islets in vivo. Our findings suggest a novel mechanism linking PSCs, islet fibrosis, and diabetes mellitus. (C) 2013 Elsevier Inc. All rights reserved.