Tre-2/USP6, BUB2, cdc16 domain family, member 1 (TBC1D1), a Rab-GTPase activating protein, is a paralogue of AS160, and has been implicated in the canonical insulin-signaling cascade in peripheral tissues. More recently, TBC1D1 was identified in rat and human pancreatic islets; however, the islet function of TBC1D1 remains not fully understood. We examined the role of TBC1D1 in glucose homeostasis and insulin secretion utilizing a rat knockout (KO) model. Chow-fed TBC1D1 KO rats had improved insulin action but impaired glucose-tolerance tests (GTT) and a lower insulin response during an intraperitoneal GTT compared with wild-type (WT) rats. The in vivo data suggest there may be an islet defect. Glucose-stimulated insulin secretion was higher in isolated KO rat islets compared with WT animals, suggesting TBC1D1 is a negative regulator of insulin secretion. Moreover, KO rats displayed reduced β-cell mass, which likely accounts for the impaired whole-body glucose homeostasis. This β-cell mass reduction was associated with increased active caspase 3, and unaltered Ki67 or urocortin 3, suggesting the induction of apoptosis rather than decreased proliferation or dedifferentiation may account for the decline in islet mass. A similar phenotype was observed in TBC1D1 heterozygous animals, highlighting the sensitivity of the pancreas to subtle reductions in TBC1D1 protein. An 8-week pair-fed high-fat diet did not further alter β-cell mass or apoptosis in KO rats, suggesting that dietary lipids per se, do not lead to a further impairment in glucose homeostasis. The present study establishes a fundamental role for TBC1D1 in maintaining in vivo β-cell mass.