Insulin release from pancreatic islet β-cells is stimulated by glucose. Glucose-induced insulin release is potentiated or suppressed by hormones and neural substances. Ghrelin, a novel acylated 28-amino acid peptide isolated from stomach, is the endogenous ligand for the growth hormone (GH) secretagogue-receptor (GHS-R). Circulating ghrelin is produced predominantly in stomach. Ghrelin is a potent stimulator of GH release and feeding as well as exhibiting positive cardiovascular effects. In relation to the glucose metabolism, initial studies indicated that low plasma ghrelin levels are associated with elevated fasting insulin levels, insulin resistance, and obesity. It has recently been demonstrated that ghrelin suppresses glucose-induced insulin release via Gαi2 subtype of GTP-binding proteins and delayed outward K+ (Kv) channels, representing a novel signaling mechanism, and that the ghrelin originating from islets regulates insulin release and thereby glycemia. Furthermore, elimination of ghrelin enhances insulin release to prevent or ameliorate glucose intolerance in high-fat diet fed mice and ob/ob mice. This review focuses on the physiological roles of ghrelin in regulating insulin release and glycemia, the insulinostatic mechanisms of ghrelin in islet β-cells, and the potential of ghrelin-GHS-R system as the therapeutic target to treat type 2 diabetes.