Pancreatic islets produce and secrete cytokines and chemokines in response to inflammatory and metabolic stress. The physiological role of these “isletokines” in health and disease is largely unknown. We observed that islets release multiple inflammatory mediators in patients undergoing islet transplants within hours of infusion. The proinflammatory cytokine interferon-γ–induced protein 10 (IP-10/CXCL10) was among the highest released, and high levels correlated with poor islet transplant outcomes. Transgenic mouse studies confirmed that donor islet–specific expression of IP-10 contributed to islet inflammation and loss of β-cell function in islet grafts. The effects of islet-derived IP-10 could be blocked by treatment of donor islets and recipient mice with anti–IP-10 neutralizing monoclonal antibody. In vitro studies showed induction of the IP-10 gene was mediated by calcineurin-dependent NFAT signaling in pancreatic β-cells in response to oxidative or inflammatory stress. Sustained association of NFAT and p300 histone acetyltransferase with the IP-10 gene required p38 and c-Jun N-terminal kinase mitogen-activated protein kinase (MAPK) activity, which differentially regulated IP-10 expression and subsequent protein release. Overall, these findings elucidate an NFAT-MAPK signaling paradigm for induction of isletokine expression in β-cells and reveal IP-10 as a primary therapeutic target to prevent β-cell–induced inflammatory loss of graft function after islet cell transplantation.