Type 2 diabetes manifests when the β-cell fails to secrete sufficient amounts of insulin to maintain normoglycemia and undergoes apoptosis. The disease progression results from an interplay of environmental factors and genetic predisposition. Polymorphisms in T-cell factor 7-like 2 (TCF7L2) strongly correlate with type 2 diabetes mellitus (T2DM). While TCF7L2 mRNA is upregulated in islets in diabetes, protein levels are downregulated. The loss of TCF7L2 induces impaired function and apoptosis. By analyzing human isolated islets, we provide three explanations for this opposite regulation and the mechanisms of TCF7L2 on β-cell function and survival. (i) We found TCF7L2 transcripts in the human β-cell, which had opposite effects on β-cell survival, function and Wnt signaling activation. While TCF7L2 clone B1, which lacks exons 13, 14, 15 and 16 induced β-cell apoptosis, impaired function and inhibited glucagon-like peptide 1 response and downstream targets of Wnt signaling, clones B3 and B7 which both contain exon 13, improved β-cell survival and function and activated Wnt signaling. (ii) TCF7L2 mRNA is extremely unstable and is rapidly degraded under pro-diabetic conditions and (iii) TCF7L2 depletion in islets induced activation of glycogen synthase kinase 3-β, but this was independent of endoplasmic reticulum stress. We demonstrated function-specific transcripts of TCF7L2, which possessed distinct physiological and pathophysiological effects on the β-cell. The presence of deleterious TCF7L2 splice variants may be a mechanism of β-cell failure in T2DM.