A sustained, high circulating level of free fatty acids (FFAs) is an important risk factor for the development of insulin resistance, islet beta-cell dysfunction, and pathogenesis of type 2 diabetes. Here, we report a novel mechanism of chronic exposure of oleic acid (OA)-induced rat insulin release impairment. Following a 4-day exposure to 0.1 mM OA, there was no significant difference in basal insulin release when comparing OA-treated and untreated islets in the presence of 2.8 mM glucose, whereas 16.7 mM glucose-stimulated insulin release increased 2-fold in control, but not in OA-treated, islets. Perforated patch-clamp recordings showed that untreated beta-cells exhibited a resting potential of −62.1 +/−0.9 mV and were electrically silent, whereas OA-treated beta-cells showed more positive resting potentials and spontaneous action potential firing. Cell-attached single-channel recordings revealed spontaneous opening of ATP-sensitive potassium (K(ATP)) channels in control, but not in OA-treated, beta-cells. Inside-out excised patch recordings showed similar activity in both OA-treated and untreated beta-cells in the absence of ATP on the inside of the cellular membrane, whereas in the presence of ATP, K(ATP) channel activity was significantly reduced in OA-treated beta-cells. Electron microscopy demonstrated that chronic exposure to OA resulted in the accumulation of triglycerides in beta-cell cytoplasm and reduced both the number of insulin-containing granules and insulin content. Collectively, chronic exposure to OA closed K(ATP) channels by increasing the sensitivity of K(ATP) channels to ATP, which in turn led to the continuous excitation of beta-cells, depletion of insulin storage, and impairment of glucose-stimulated insulin release.