Rise in plasma free fatty acids (FFAs) represents a major risk factor for obesity-induced type 2 diabetes. Saturated FFAs cause a progressive decline in insulin secretion by promoting pancreatic β-cell death through increased production of reactive oxygen species (ROS). Recent studies have demonstrated that palmitate (a C16-FFA)-induced rise in ROS causes β-cell death by triggering mitochondrial fragmentation, but the underlying mechanisms are unclear. Using the INS1-832/13 β-cell line, here we demonstrate that palmitate generates the ROS required for mitochondrial fission by activating NOX (NADPH oxidase)-2. More importantly, we show that chemical inhibition, RNAi-mediated silencing and knockout of ROS-sensitive TRPM (transient receptor potential melastatin)-2 channels prevent palmitate-induced mitochondrial fission. Although TRPM2 activation affects the intracellular dynamics of Ca2+ and Zn2+, chelation of Zn2+ alone was sufficient to prevent mitochondrial fission. Consistent with the role of Zn2+, palmitate caused a rise in mitochondrial Zn2+, leading to Zn2+-dependent mitochondrial recruitment of Drp-1 (a protein that catalyses mitochondrial fission) and loss of mitochondrial membrane potential. In agreement with the previous reports, Ca2+ caused Drp-1 recruitment, but it failed to induce mitochondrial fission in the absence of Zn2+. These results indicate a novel role for Zn2+ in mitochondrial dynamics. Inhibition or knockout of TRPM2 channels in mouse islets and RNAi-mediated silencing of TRPM2 expression in human islets prevented FFA/cytokine-induced β-cell death, findings that are consistent with the role of abnormal mitochondrial fission in cell death. To conclude, our results reveal a novel, potentially druggable signalling pathway for FFA-induced β-cell death. The cascade involves NOX-2-dependent production of ROS, activation of TRPM2 channels, rise in mitochondrial Zn2+, Drp-1 recruitment and abnormal mitochondrial fission.