β-cell dysfunction in type 2 diabetes involves oxidative stress and endoplasmic reticulum (ER) stress driven by non-esterified fatty acids (NEFA’s), high glucose and local inflammation. In addition to cytokines already implicated, we have identified IL-23, IL-24 and IL-33 as significant contributors to β-cell oxidative and ER stress. In contrast, IL-22 down-regulates pro-oxidant genes (particularly Nos2) and up-regulates anti-oxidant genes such as Gpx5, Prdx5 and Sod2 in murine MIN6N8 β-cells and islets, and human islets. Pre-exposure of β-cells or islets to IL-22 provides near complete protection from oxidative stress and ER stress induced by high glucose, NEFA’s, inflammatory cytokines and environmental reactive oxygen species. IL-22R1 neutralising antibodies induce oxidative and ER stress in healthy mouse and human islets, demonstrating that IL-22-IL-22R1 signalling maintains islet homeostasis. In islets from mice with high fat diet-induced obesity, ex vivo exposure to IL-22 suppresses ER stress and chemokine production, and reduces glucose-stimulated insulin secretion. Obese mice treated with IL-22 show recovery of glucose tolerance and correction of fasting hyperinsulinaemia by 2 weeks, at which time insulin resistance was unchanged. However, after 4 weeks treatment insulin sensitivity was restored. Islets from IL-22-treated obese mice showed greatly reduced proinsulin secretion and near complete suppression of ER stress and inflammation. Furthermore, insulin secreted by islets from mice treated with IL-22 showed greater efficacy in driving glucose uptake in cultured adipocytes. Taken together these data suggest that IL-22 is a natural regulator of β-cell insulin biosynthesis and secretion, protecting the β-cell from stress, preventing hypersecretion of poor quality insulin, and suppressing innate islet inflammation. IL-22-treated mice also show reduced body weight and this is accompanied by diminished night time food intake suggesting an effect on satiety. While the effect of IL-22 on β-cells appears to explain the restoration of glycaemic control, extra-pancreatic effects of IL-22 cannot yet be excluded.