Decreased insulin secretory capacity in Type 2 diabetes mellitus is associated with beta-cell dedifferentiation and inflammation. We hypothesize that prolonged exposure of beta-cells to low concentrations of IL-1β induce beta-cell dedifferentiation characterized by impaired glucose-stimulated insulin secretion, reduced expression of key beta-cell genes and changes in histone modifications at gene loci known to affect beta-cell function. Ten days exposure to IL-1β at non-cytotoxic concentrations reduced insulin secretion and beta-cell proliferation and decreased expression of key beta-cell identity genes, including MafA and Ucn3 and decreased H3K27ac at the gene loci, suggesting that inflammatory cytokines directly affects the epigenome. Following removal of IL-1β, beta-cell function was normalized and mRNA expression of beta-cell identity genes, such as insulin and Ucn3 returned to pre-stimulation levels. Our findings indicate that prolonged exposure to low concentrations of IL-1β induces epigenetic changes associated with loss of beta-cell identity as observed in Type 2 diabetes.