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Post-translational prenylation involves incorporation of 15-(farnesyl) or 20-(geranylgeranyl) carbon derivatives of mevalonic acid into highly conserved C-terminal cysteines of proteins. The farnesyl transferase (FTase) and the geranylgeranyl transferase (GGTase) mediate incorporation of farnesyl and geranylgeranyl groups, respectively. At least 300 proteins are prenylated in the human genome; the majority of these are implicated in cellular processes including growth, differentiation, cytoskeletal function and vesicle trafficking. From a functional standpoint, isoprenylation is requisite for targeting of modified proteins to relevant cellular compartments for regulation of effector proteins. Pharmacological and molecular biological studies have provided compelling evidence for key roles of this signaling pathway in physiological insulin secretion in normal rodent and human islets. Recent evidence indicates that inhibition of prenylation results in mislocalization of unprenylated proteins, and surprisingly, they remain in active (GTP-bound) conformation. Sustained activation of G proteins has been reported in mice lacking GGTase, suggesting alternate mechanisms for the activation of non-prenylated G proteins. These findings further raise an interesting question if mislocalized, non-prenylated and functionally active G proteins cause cellular pathology since aberrant protein prenylation has been implicated in the onset of cardiovascular disease and diabetes. Herein, we overview the existing evidence to implicate prenylation in islet function and potential defects in this signaling pathways in the diabetic β-cell. We will also identify critical knowledge gaps that need to be addressed for the development of therapeutics to halt defects in these signaling steps in β cells in models of impaired insulin secretion, metabolic stress and diabetes.