High concentrations of free fatty acids (FFAs) or lipopolysaccharide (LPS) could lead to β-cell apoptosis and dysfunction, while low-grade elevation of FFAs or LPS, which are more common in people with type 2 diabetes mellitus (T2DM) or obesity, have no obvious toxic effect on β-cells. Palmitate is a component closely related to metabolic disorders in FFAs. Recent studies have found that low-grade elevation of palmitate and LPS synergistically affects the sphingolipid signaling pathway by activating Toll-like receptor 4 (TLR4) and further enhances the expression of inflammatory cytokines in immune cells. Previous studies demonstrated that sphingolipids also played an important role in the occurrence and development of T2DM. This study aimed to investigate the synergistic effects of low-grade elevation of palmitate and LPS on viability, apoptosis and insulin secretion in the rat pancreatic β-cell line INS-1 or islets and the role of sphingolipids in this process. We showed that low-grade elevation of palmitate or LPS alone did not affect the viability, apoptosis, glucose-stimulated insulin secretion (GSIS) or intracellular insulin content of INS-1 cells or islets, while the combination of the two synergistically inhibited cell viability, induced apoptosis and decreased basal insulin secretion in INS-1 cells or islets. Treatment with palmitate and LPS markedly upregulated TLR4 protein expression and downregulated neutral ceramidase (NCDase) activity and protein expression. Additionally, low-grade elevation of palmitate and LPS synergistically induced a significant increase in ceramide and a decrease in sphingosine-1-phosphate. Blocking TLR4 signaling or overexpressing NCDase remarkably attenuated INS-1 cell injury induced by the combination of palmitate and LPS. However, inhibition of ceramide synthase did not ameliorate injury induced by palmitate and LPS. Overall, we show for the first time that low-grade elevation of palmitate and LPS synergistically induced β-cell damage by activating TLR4 signaling, inhibiting NCDase activity, and further modulating sphingolipid metabolism, which was different from a high concentration of palmitate-induced β-cell injury by promoting ceramide synthesis.