We have investigated the in vitro effects of the saturated free fatty acid palmitate on mouse pancreatic β-cells by a combination of electrophysiological recordings, intracellular Ca2+ ([Ca2+]i) microfluorimetry and insulin release measurements. Addition of palmitate (1 mM, bound to fatty acid-free albumin) to intact islets exposed to 15 mM glucose increased the [Ca2+]i by ∼30% and insulin secretion 2-fold. Palmitate remained capable of increasing [Ca2+]i and insulin release in the presence of tolbutamide and in islets depolarized by high K+ in combination with diazoxide, indicating that the stimulation occurs independently of closure of ATP-regulated K+ channels (KATP channels). Palmitate (0.5 mM) augmented exocytosis (measured as an increase in cell capacitance) in single β-cells and increased the size of the readily releasable pool (RRP) of granules 2-fold. Whole-cell peak Ca2+ currents rose by ∼25% following addition of 0.5 mM palmitate, an effect that was abolished in the presence of 10 μM isradipine indicating that the free fatty acid specifically acts on L-type Ca2+ channels. The actions of palmitate on exocytosis and Ca2+ currents were not mimicked by intracellular application of palmitoyl-CoA. We conclude that palmitate increases insulin secretion by a KATP channel-independent mechanism exerted at the level of exocytosis and that involves both augmentation of L-type Ca2+ currents and an increased size of the RRP.