Adaptive beta-cell replication occurs in response to increased metabolic demand during insulin resistance. The intracellular mediators of this compensatory response are poorly defined and their identification could provide significant targets for beta-cell regeneration therapies. Here we show that glucose and insulin in vitro and insulin resistance in vivo activate protein kinase C zeta (PKCzeta) in pancreatic islets and beta-cells. PKCzeta is required for glucose- and glucokinase activator-induced proliferation of rodent and human beta-cells in vitro. Furthermore, either kinase-dead PKCzeta expression (KD-PKCzeta) or disruption of PKCzeta in mouse beta-cells blocks compensatory beta-cell replication when acute hyperglycemia/hyperinsulinemia is induced. Importantly, KD-PKCzeta inhibits insulin resistance-mediated mammalian target of rapamycin (mTOR) activation and cyclin-D2 upregulation independent of Akt activation. In summary, PKCzeta activation is key for early compensatory beta-cell replication in insulin resistance by regulating the downstream signals mTOR and cyclin-D2. This suggests that alterations in PKCzeta expression or activity might contribute to inadequate beta-cell mass expansion and beta-cell failure leading to type 2 diabetes.