Saturated fatty acids have been considered major contributing factors in type 2 diabetes, whereas unsaturated fatty acids have beneficial effects for preventing the development of diabetes. However, the effects of polyunsaturated fatty acids in pancreatic β cells have not been reported. Here, we examined the effects of arachidonic acid (AA) on palmitic acid (PA)-mediated lipotoxicity in clonal HIT-T15 pancreatic β cells. AA prevented the PA-induced lipotoxicity as indicated by cell viability, DNA fragmentation and mitochondrial membrane potential, whereas eicosatetraynoic acid (ETYA), a non-metabolizable AA, had little effect on PA-induced lipotoxicity. In parallel with its protective effects against PA-induced lipotoxicity, AA restored impaired insulin expression and secretion induced by PA. AA but not ETYA increased intracellular triglyceride (TG) in the presence of PA compared with PA alone, and xanthohumol, a diacylglycerol acyltransferase (DGAT) inhibitor, reversed AA-induced protection from PA. Taken together, our results suggest that AA protects against PA-induced lipotoxicity in clonal HIT-T15 pancreatic β cells, and the protective effects may be associated with TG accumulation, possibly through sequestration of lipotoxic PA into TG.