Elevated levels of palmitate accentuate glucose-stimulated insulin secretion (GSIS) after short-term and cause beta-cell dysfunction after prolonged exposure. We investigated whether metformin, the first-line oral drug for treatment of T2DM, has beneficial effects on FFA-treated human islets and the potential mechanisms behind the effects. Insulin secretion, oxygen consumption rate (OCR), AMPK activation, endoplasmic reticulum (ER) stress and apoptosis were examined in isolated human islets after exposure to elevated levels of palmitate in the absence or presence of metformin. Palmitate exposure doubled GSIS after 2 days but halved after 7 days compared with control. Inclusion of metformin during palmitate exposure normalized insulin secretion both after 2 and 7 days. After 2-day exposure to palmitate, OCR and the marker of the adaptive arm of ER stress response (sorcin) were significantly raised, whereas AMPK phosphorylation, markers of pro-apoptotic arm of ER stress response (p-EIF2α and CHOP) and apoptosis (cleaved caspase 3) were not affected. Presence of metformin during 2-day palmitate exposure normalized OCR and sorcin levels. After 7-day exposure to palmitate, OCR and sorcin were not significantly different from control level, p-AMPK was reduced and p-EIF2α, CHOP and cleaved caspase 3 were strongly upregulated. Presence of metformin during 7-day culture with palmitate normalized the level of p-AMPK, p-EIF2α, CHOP and cleaved caspase 3 but significantly increased the level of sorcin. Our study demonstrates that metformin prevents early insulin hypersecretion and later decrease in insulin secretion from palmitate-treated human islets by utilizing different mechanisms.