Diabetes is characterized by pancreatic β-cell dedifferentiation. Dedifferentiating β cells inappropriately metabolize lipids over carbohydrates and exhibit impaired mitochondrial oxidative phosphorylation. However, the mechanism linking the β-cell's response to an adverse metabolic environment with impaired mitochondrial function remains unclear. Here we report that the oxidoreductase cytochrome b5 reductase 3 (Cyb5r3) links FoxO1 signaling to β-cell stimulus/secretion coupling by regulating mitochondrial function, reactive oxygen species generation, and nicotinamide actin dysfunction (NAD)/reduced nicotinamide actin dysfunction (NADH) ratios. The expression of Cyb5r3 is decreased in FoxO1-deficient β cells. Mice with β-cell-specific deletion of Cyb5r3 have impaired insulin secretion, resulting in glucose intolerance and diet-induced hyperglycemia. Cyb5r3-deficient β cells have a blunted respiratory response to glucose and display extensive mitochondrial and secretory granule abnormalities, consistent with altered differentiation. Moreover, FoxO1 is unable to maintain expression of key differentiation markers in Cyb5r3-deficient β cells, suggesting that Cyb5r3 is required for FoxO1-dependent lineage stability. The findings highlight a pathway linking FoxO1 to mitochondrial dysfunction that can mediate β-cell failure.