Diabetes causes pancreatic beta cell failure through hyperglycemia-induced oxidative stress, or "glucose toxicity." We show that the forkhead protein FoxO1 protects beta cells against oxidative stress by forming a complex with the promyelocytic leukemia protein Pml and the NAD-dependent deacetylase Sirt1 to activate expression of NeuroD and MafA, two Insulin2 (Ins2) gene transcription factors. Using acetylation-defective and acetylation-mimicking mutants, we demonstrate that acetylation targets FoxO1 to Pml and prevents ubiquitin-dependent degradation. We show that hyperglycemia suppresses MafA expression in vivo and that MafA inhibition can be prevented by transgenic expression of constitutively nuclear FoxO1 in beta cells. The findings provide a mechanism linking glucose- and growth factor receptor-activated pathways to protect beta cells against oxidative damage via FoxO proteins.