Interleukin 1β (IL-1β) is an important inflammatory mediator of type 2 diabetes. Here we show that oligomers of islet amyloid polypeptide (IAPP), a protein that forms amyloid deposits in the pancreas during type 2 diabetes, triggered the NLRP3 inflammasome and generated mature IL-1β. One therapy for type 2 diabetes, glyburide, suppressed IAPP-mediated IL-1β production in vitro. Processing of IL-1β initiated by IAPP first required priming, a process that involved glucose metabolism and was facilitated by minimally oxidized low-density lipoprotein. Finally, mice transgenic for human IAPP had more IL-1β in pancreatic islets, which localized together with amyloid and macrophages. Our findings identify previously unknown mechanisms in the pathogenesis of type 2 diabetes and treatment of pathology caused by IAPP.