ABSTRACT The alpha ketoglutarate-dependent dioxygenase, prolyl-4-hydroxylase 3 (PHD3), is a hypoxia-inducible factor target that uses molecular oxygen to hydroxylate proline. While PHD3 has been reported to influence cancer cell metabolism and liver insulin sensitivity, relatively little is known about effects of this highly conserved enzyme in insulin-secreting β-cells. Here, we show that deletion of PHD3 specifically in β-cells (βPHD3KO) is associated with impaired glucose homeostasis in mice fed high fat diet. In the early stages of dietary fat excess, βPHD3KO islets energetically rewire, leading to defects in the management of pyruvate fate and a shift away from glycolysis. However, βPHD3KO islets are able to maintain oxidative phosphorylation and insulin secretion by increasing utilization of fatty acids to supply the tricarboxylic acid cycle. This nutrient-sensing switch cannot be sustained and βPHD3KO islets begin to show signs of failure in response to prolonged metabolic stress, including impaired glucose-stimulated ATP/ADP rises, Ca 2+ fluxes and insulin secretion. Thus, PHD3 might be a pivotal component of the β-cell glucose metabolism machinery by suppressing the use of fatty acids as a primary fuel source, under obesogenic and insulin resistant states. SIGNIFICANCE STATEMENT Prolyl-4-hydroxylase 3 (PHD3) is involved in the oxygen-dependent regulation of cell phenotype. A number of recent studies have shown that PHD3 might operate at the interface between oxygen availability and metabolism. To understand how PHD3 influences insulin secretion, which depends on intact glucose metabolism, we generated mice lacking PHD3 specifically in pancreatic β-cells. These mice, termed βPHD3KO, are apparently normal until fed high fat diet at which point their β-cells switch to fatty acids as a fuel source. This switch cannot be tolerated and β-cells in βPHD3KO mice eventually fail. Thus, PHD3 maintains glucose-stimulated insulin secretion in β-cells during states of fatty acid excess, such as diabetes and obesity.