β-Cell failure is central to the development of type 2 diabetes mellitus (T2DM). Dysregulation of metabolic and inflammatory processes during obesity contributes to the loss of islet function and impaired β-cell insulin secretion. Modulating the immune system, therefore, has the potential to ameliorate diseases. We report that inducing sustained expression of β-catenin in conventional dendritic cells (cDCs) provides a novel mechanism to enhance β-cell insulin secretion. Intriguingly, cDCs with constitutively activated β-catenin induced islet expansion by increasing β-cell proliferation in a model of diet-induced obesity. We further found that inflammation in these islets was reduced. Combined, these effects improved β-cell insulin secretion, suggesting a unique compensatory mechanism driven by cDCs to generate a greater insulin reserve in response to obesity-induced insulin resistance. Our findings highlight the potential of immune modulation to improve β-cell mass and function in T2DM.