Oxytocin is associated mainly with modulating reproductive function. However, studies suggest that oxytocin also plays a role in endocrine pancreatic function. In the present study, islet expression of oxytocin and its related receptor was confirmed in mouse islets as well as cultured rodent and human beta-cells. Oxytocin significantly stimulated glucose-induced insulin secretion from isolated mouse islets. Similar insulinotropic actions were also observed in rodent BRIN BD11 and human 1.1B4 beta-cells. Positive effects of oxytocin on insulin secretion were almost fully annulled by the oxytocin receptor antagonist, atosiban. In terms of mechanism of insulin secretory action, oxytocin had no effect on beta-cell membrane potential or cAMP generation, but did augment intracellular calcium concentrations. In vivo administration of oxytocin to mice significantly reduced overall blood glucose levels and increased plasma insulin concentrations in response to a glucose challenge. Oxytocin also had a modest, but significant, appetite suppressive effect. As expected, streptozotocin diabetic mice had marked loss of beta-cell area accompanied by increases in alpha-cell area, whilst hydrocortisone treatment increased beta-cell and overall islet areas. Both mouse models of diabetes presented with dramatically decreased percentage islet oxytocin co-localisation with insulin and increased co-localisation with glucagon. More detailed studies in cultured beta-cell lines revealed direct positive effects of oxytocin on beta-cell proliferation and protection against apoptosis. Together, these data highlight a potentially important role of islet-derived oxytocin and related receptor signalling pathways on the modulation of beta-cell function and survival.