Sustained elevations of glucose and free fatty acid concentration have deleterious effects on pancreatic beta cell function. One of the hallmarks of such glucolipotoxicity is a reduction in insulin gene expression, resulting from decreased insulin promoter activity. Sterol regulatory element binding protein-1c (SREBP-1c), a lipogenic transcription factor, is related to the development of beta cell dysfunction caused by elevated concentrations of glucose and free fatty acid. Small heterodimer partner (SHP) interacting leucine zipper protein (SMILE), also known as Zhangfei, is a novel protein which interacts with SHP that mediates glucotoxicity in INS-1 rat insulinoma cells. Treatment of INS-1 cells with high concentrations of glucose and palmitate increased SREBP-1c and SMILE expression, and decreased insulin gene expression. Adenovirus-mediated overexpression of SREBP-1c in INS-1 cells induced SMILE expression. Moreover, adenovirus-mediated overexpression of SMILE (Ad-SMILE) in INS-1 cells impaired glucose-stimulated insulin secretion as well as insulin gene expression. Ad-SMILE overexpression also inhibited the expression of beta-cell enriched transcription factors including pancreatic duodenal homeobox factor-1, beta cell E box transactivator 2 and RIPE3b1/MafA, in INS-1 cells. Finally, in COS-1 cells, expression of SMILE inhibited the insulin promoter activity induced by these same beta-cell enriched transcription factors. These results collectively suggest that SMILE plays an important role in the development of beta cell dysfunction induced by glucolipotoxicity. (C) 2012 Elsevier Inc. All rights reserved.