Forkhead Box O1 (FoxO1) is a key transcription regulator of insulin/IGF-I signaling pathway, and its activity can be increased by dexamethasone (DEX) in several cell types. However, the role of FoxO1 in DEX-induced pancreatic beta-cell dysfunction has not been fully understood. Therefore, in this study, we investigated whether FoxO1 could mediate DEX-induced beta-cell dysfunction and the possible underlying mechanisms in pancreatic beta-cell line RINm5F cells and primary rat islet. We found that DEX markedly increased FoxO1 mRNA and protein expression and decreased FoxO1 phosphorylation through the Akt pathway, which resulted in an increase in active FoxO1 in RINm5F cells and isolated rat islets. Activated FoxO1 subsequently inhibited pancreatic duodenal homeobox-1 expression and induced nuclear exclusion of pancreatic duodenal homeobox-1. Knockdown of FoxO1 by RNA interference restored the expression of pancreatic duodenal homeobox-1 and prevented DEX-induced dysfunction of glucose-stimulated insulin secretion in rat islets. Together, the results of present study demonstrate that FoxO1 is integrally involved in DEX-induced inhibition of pancreatic duodenal homeobox-1 and glucose-stimulated insulin secretion dysfunction in pancreatic islet beta-cells. Inhibition of FoxO1 can effectively protect beta-cells against DEX-induced dysfunction.