Previously, we found that mice overexpressing glutathione peroxidase 1 (GPX1) (OE) developed type 2 diabetes mellitus (T2DM)-like phenotypes and hyperinsulinemia and hyper-secretion of insulin after glucose stimulation were two primary effects of the cellular GPX1 overproduction. To understand how GPX1 overexpression led to these primary metabolic outcomes, we identified an islet protein, regenerating islet-derived 2 (Reg2), whose mRNA and protein level in islets were diminished by GPX1 overproduction. We hypothesized that the depleted REG2 in OE islets mediated the OE T2DM-like phenotypes. Firstly, we demonstrated that the biochemical regulation of REG2 by GPX1 was through modulating intracellular redox status both in vitro and in vivo. We then demonstrated a novel metabolic function of REG2 in rescuing several phenotypes in the OE mice including hyperinsulinemia, hyper-secretion of insulin after the glucose stimulation, hyperglycemia and hypertriglyceridemia. We further found that REG2 suppressed insulin secretion in a glucose-dependent way, and that glucose metabolism served as the downstream signaling in vitro. In addition, we uncovered a potential functional domain in REG2, the C-type lectin domain, which might participate in the inhibition of glucose-stimulated insulin secretion (GSIS) by REG2. Recent human and animal studies have shown that selenium (Se) supplements lead to increased risk of developing T2DM. However, the underlying mechanisms are not well understood. Since GPX1 is the most abundant selenoprotein in the body, the OE mice might serve as a good animal model to study the effects of Se supplements. To determine if dietary Se deficiency could improve the T2DM-like phenotypes in OE mice, we fed WT and OE mice a Se-deficient diet or Se-supplemented diet for 4 months. We showed that dietary Se deficiency in the OE mice partially alleviated the T2DM-like phenotypes. Expression of genes and proteins related to insulin synthesis and secretion, as well as glycolysis, gluconeogensis and lipogenesis was downregulated by dietary Se deficiency. Taken together, these new insights into the regulation and function of Reg2 and Se have not only led to their identifications as important players in the diabetogenic risk of GPX1 overexpression and(or) Se supplements, but also raise the possibility to developing strategies to combat T2DM.