C2-ceramide, a cell permeable analogue of ceramide [CER] markedly reduced mitochondrial membrane potential [MMP] in insulin-secreting INS cells, which was followed by a significant accumulation of cytochrome c [Cyt c] into the cytosolic compartment. In a manner akin to CER, exposure of these cells to interleukin-1beta [IL-1beta] also resulted in reduction in MMP and cytosolic accumulation of Cyt c. Further, long-term exposure of these cells to either CER [but not its inactive analogue] or IL-1beta caused a marked reduction in their metabolic viability. However, unlike IL-1beta, which increased nitric oxide [NO] release, CER-treatment of INS cells had no effects of CER on NO release were demonstrable. Together, these findings suggest that CER-induced mitochondrial effects may not be mediated via iNOS gene expression and NO production. CER also activated an okadaic acid -sensitive protein phosphatase [CAPP] in the purified mitochondrial fraction, suggesting that CAPP might represent one of the target proteins for CER in the beta cell mitochondria. Together, our findings suggest direct detrimental effects of CER on mitochondrial function in beta cells leading to their dysfunction and demise via apoptosis. Moreover, our findings provide evidence for a potential difference in the mechanisms underlying CER- and IL-1beta-induced mitochondrial defects and apoptotic demise of the effete beta cell.