Elevated fasting blood glucose (FBG) is associated with increased risk for the development of type 2 diabetes and cardiovascular-associated mortality. Genome-wide association studies (GWAS) have linked polymorphisms in G6PC2 with variations in FBG and body fat, although not insulin sensitivity or glucose tolerance. G6PC2 encodes an islet-specific, endoplasmic reticulum-resident glucose-6-phosphatase catalytic subunit. A combination of in situ perfused pancreas, in vitro isolated islet, and in vivo analyses were used to explore the function of G6pc2 in mice. G6pc2 deletion had little effect on insulin sensitivity and glucose tolerance, whereas body fat was reduced in female G6pc2 knockout (KO) mice on both a chow and high-fat diet, observations that are all consistent with human GWAS data. G6pc2 deletion resulted in a leftward shift in the dose-response curve for glucose-stimulated insulin secretion (GSIS). As a consequence, under fasting conditions in which plasma insulin levels were identical, blood glucose levels were reduced in G6pc2 KO mice, again consistent with human GWAS data. Glucose-6-phosphatase activity was reduced, whereas basal cytoplasmic calcium levels were elevated in islets isolated from G6pc2 KO mice. These data suggest that G6pc2 represents a novel, negative regulator of basal GSIS that acts by hydrolyzing glucose-6-phosphate, thereby reducing glycolytic flux.