In addition to the well known regulating effects of leptin on energy balance and glucose homeostasis through the central nervous system, circulating leptin has a direct effect on pancreatic islet and insulin secretion through its receptor (OBRb). The LIM-homeodomain transcription factor Isl-1 is expressed in all classes of pancreatic endocrine cells and is involved in regulating both islet development and insulin secretion. Both OBRb and Isl-1 mutations result in obesity-related diabetes. However, the interactions and physiological significance of leptin and Isl-1 in pancreatic islets remain to be established. Here, we show that most of leptin target cells in pancreatic islets and NIT beta cells express Isl-1. Both in vivo and in vitro results demonstrate that leptin suppresses Isl-1 expression and insulin secretion in islet in physiological and pathophysiological conditions, e.g. high fat diet. This effect of leptin on insulin secretion is lost in leptin receptor-defective db/db and Isl-1-inducible knock-out mice. We conclude that the action of leptin on insulin secretion is at least partly mediated by Isl-1. Another new finding of this study is that Isl-1 acts as a direct downstream target of leptin signaling molecule STAT3 to influence the effect of leptin on insulin secretion, whereas inversely, insulin has feedback regulating effects on Isl-1 expression through JAK-STAT3 pathway. These findings are crucial for understanding the mechanisms regulating insulin secretion and metabolism in related diseases, such as obesity and type 2 diabetes.