Glucocorticoids are diabetogenic hormones because they decrease glucose uptake, increase hepatic glucose production, and inhibit insulin release. To study the long-term effects of increased glucocorticoid sensitivity in β-cells, we studied transgenic mice overexpressing the rat glucocorticoid receptor targeted to the β-cells using the rat insulin I promoter. Here we report that these mice developed hyperglycemia both in the fed and the overnight-fasted states at 12–15 months of age. Progression from impaired glucose tolerance, previously observed in the same colony at the age of 3 months, to manifest diabetes was not associated with morphological changes or increased apoptosis in the β-cells. Instead, our current results suggest that the development of diabetes is due to augmented inhibition of insulin secretion through α₂-adrenergic receptors (α₂-ARs). Thus, we found a significantly higher density of α₂-ARs in the islets of transgenic mice compared with controls, based on binding studies with the α₂-AR agonist UK 14304. Furthermore, incubation of islets with benextramine, a selective antagonist of the α₂-AR, restored insulin secretion in response to glucose in isolated islets from transgenic mice, whereas it had no effect on control islets. These results indicate that the chronic enhancement of glucocorticoid signaling in pancreatic β-cells results in hyperglycemia and impaired glucose tolerance. This effect may involve signaling pathways that participate in the regulation of insulin secretion via the α₂-AR.