Glucagon-like peptide 1 (GLP-1) is the most potent physiological incretin for insulin secretion from the pancreatic beta-cell, but its mechanism of action has not been established. It interacts with specific cell-surface receptors, generates cAMP, and thereby activates protein kinase A (PKA). Many changes in pancreatic beta-cell function have been attributed to PKA activation, but the contribution of each one to the secretory response is unknown. We show here for the first time that GLP-1 rapidly released free fatty acids (FFAs) from cellular stores, thereby lowering intracellular pH (pHi) and stimulating FFA oxidation in clonal beta-cells (HIT). Similar changes were observed with forskolin, suggesting that stimulation of lipolysis was a function of PKA activation in beta-cells. Triacsin C, which inhibits the conversion of FFAs to long-chain acyl CoA (LC-CoA), enhanced basal FFA efflux as well as GLP-1-induced acidification and efflux of FFAs from the cell. Increasing the concentration of the lipase inhibitor orlistat progressively and largely diminished the increment in secretion caused by forskolin. However, glucose-stimulated secretion was less inhibited by orlistat and only at the highest concentration tested. Because the acute addition of FFAs also increases glucose-stimulated insulin secretion, these data suggest that the incretin function of GLP-1 may involve a major role for lipolysis in cAMP-mediated potentiation of secretion.