Sphingomyelin synthase 1 (SMS1) catalyzes the conversion of ceramide to sphingomyelin. Here, we generated and analyzed SMS1-null mice. SMS1-null mice exhibited moderate neonatal lethality, reduced body weight, and loss of fat tissues mass, suggesting that they might have metabolic abnormality. Indeed, analysis on glucose metabolism revealed that they showed severe deficiencies in insulin secretion. Isolated mutant islets exhibited severely impaired ability to release insulin, dependent on glucose stimuli. Further analysis indicated that mitochondria in mutant islet cells cannot up-regulate ATP production in response to glucose. We also observed additional mitochondrial abnormalities, such as hyperpolarized membrane potential and increased levels of reactive oxygen species (ROS) in mutant islets. Finally, when SMS1-null mice were treated with the anti-oxidant N-acetyl cysteine, we observed partial recovery of insulin secretion, indicating that ROS overproduction underlies pancreatic β-cell dysfunction in SMS1-null mice. Altogether, our data suggest that SMS1 is important for controlling ROS generation, and that SMS1 is required for normal mitochondrial function and insulin secretion in pancreatic β-cells. © 2011 by The American Society for Biochemistry and Molecular Biology, Inc.