The paired box 6 (PAX6) transcription factor is crucial for normal pancreatic islet development and function. Heterozygous mutations of are associated with impaired insulin secretion and early-onset diabetes mellitus in humans. However, the molecular mechanism of PAX6 in controlling insulin secretion in human beta cells and its pathophysiological role in type 2 diabetes (T2D) remain ambiguous. We investigated the molecular pathway of PAX6 in the regulation of insulin secretion and the potential therapeutic value of PAX6 in T2D by using human pancreatic beta cell line EndoC-βH1, the mouse model, and primary human pancreatic islets. Through loss- and gain-of-function approaches, we uncovered a mechanism by which PAX6 modulates glucose-stimulated insulin secretion (GSIS) through a cAMP response element-binding protein (CREB)/Munc18-1/2 pathway. Moreover, under diabetic conditions, beta cells and pancreatic islets displayed dampened PAX6/CREB/Munc18-1/2 pathway activity and impaired GSIS, which were reversed by PAX6 replenishment. Adeno-associated virus-mediated PAX6 overexpression in mouse pancreatic beta cells led to a sustained amelioration of glycemic perturbation in vivo but did not affect insulin resistance. Our study highlights the pathophysiological role of PAX6 in T2D-associated beta cell dysfunction in humans and suggests the potential of gene transfer in preserving and restoring beta cell function.