Fetal glucagon concentrations are elevated in the presence of a compromised intrauterine environment, as in cases of placental insufficiency and perinatal acidaemia. Our objective was to investigate the impact of late gestation fetal hyperglucagonaemia on in vivo insulin secretion and pancreatic islet structure. Chronically catheterized late gestation fetal sheep received an intravenous infusion of glucagon at low (5ng/kg/min; GCG-5) or high (50ng/kg/min; GCG-50) concentrations or a vehicle control (CON) for 8-10days.Glucose-stimulated fetal insulin secretion (GSIS) was measured following 3h (acute response) and 8-10days (chronic response) of experimental infusions. Insulin, glucose and amino acid concentrations were measured longitudinally. The pancreas was collected at the study end for histology and gene expression analysis. Acute exposure (3h) to GCG-50 induced a 3-fold increase in basal insulin concentrations with greater GSIS. Meanwhile, chronic exposure to both GCG-5 and GCG-50 decreased basal insulin concentrations 2-fold by day 8-10. Chronic GCG-50 also blunted GSIS at the study end. Fetal amino acid concentrations were decreased within 24h of GCG-5 and GCG-50, while there were no differences in fetal glucose. Histologically, GCG-5 and GCG-50 had lower β- and α-cell proliferation, as well as lower α-cell mass and pancreas weight, while GCG-50 had lower islet area. This study demonstrates that chronic glucagon elevation in late gestation fetuses impairs β-cell proliferation and insulin secretion, which has the potential to contribute to later-life diabetes risk. We speculate that the action of glucagon in lower circulating fetal amino acid concentrations may have a suppressive effect on insulin secretion. KEY POINTS: We have previously demonstrated in a chronically catheterized fetal sheep model that experimentally elevated glucagon in the fetus impairs placental function, reduces fetal protein accretion and lowers fetal weight. In the present study, we further characterized the effects of elevated fetal glucagon on fetal physiology with a focus on pancreatic development and β-cell function. We show that experimentally elevated fetal glucagon results in lower β- and α-cell proliferation, as well as decreased insulin secretion after 8-10days of glucagon infusion. These results have important implications for β-cell reserve and later-life predisposition to diabetes.