Given its wide spectrum of biological activities such as growth hormone (GH) release, feeding stimulation, adiposity and cardiovascular actions, the discovery of ghrelin opened many new perspectives within neuroendocrine, metabolic and cardiovascular research, thus suggesting its possible clinical application. Circulating ghrelin is produced predominantly in the stomach, and its receptor GH secretagogue receptor (GHS-R) is expressed in a variety of central and peripheral tissues. Ghrelin, GHS-R and ghrelin O-acyltransferase (GOAT), the enzyme that promotes the acylation of the third serine residue of ghrelin, are all expressed in pancreatic islets, and this peptide is released into pancreatic microcirculations. Ghrelin inhibits insulin release in mice, rats and humans. The signal transduction mechanisms of ghrelin receptor in islet β-cells are very unique, being distinct from those utilized for GH release. Pharmacological and genetic blockade of islet-derived ghrelin markedly augments glucose-induced insulin release in vitro. Ablation of ghrelin, GHS-R or GOAT enhances insulin release and prevents impaired glucose tolerance in high-fat, diet-induced and leptin-deficient obese models. Thus, manipulation of the insulinostatic function of the ghrelin-GHS-R system, particularly that in islets, could optimize the amount of insulin release to meet the systemic demand. Ghrelin antagonism provides a novel strategy to treat type 2 diabetes with dysregulated insulin release.