Rationale: NPC1 is a protein localized on the lysosome membrane regulating intracellular cholesterol transportation and maintaining normal lysosome function. GWAS studies have found that NPC1 variants in T2D was a pancreatic islet expression quantitative trait locus, suggesting a potential role of NPC1 in T2D islet pathophysiology. Methods: Two-week-old Npc1-/- mice and wild type littermates were employed to examine pancreatic β cell morphology and functional changes induced by loss of Npc1. Single cell RNA sequencing was conducted on primary islets. Npc1-/- Min6 cell line was generated using CRISPR/Cas9 gene editing. Seahorse XF24 was used to analyze primary islet and Min6 cell mitochondria respiration. Ultra-high-resolution cell imaging with Lattice SIM2 and electron microscope imaging were used to observe mitochondria and lysosome in primary islet β and Min6 cells. Mitophagy Dye and mt-Keima were used to measure β cell mitophagy. Results: In Npc1-/- mice, we found that β cell survival and pancreatic β cell mass expansion as well as islet glucose induced insulin secretion in 2-week-old mice were reduced. Npc1 loss retarded postnatal β cell differentiation and growth as well as impaired mitochondria oxidative phosphorylation (OXPHOS) function to increase mitochondrial superoxide production, which might be attributed to impaired autophagy flux particularly mitochondria autophagy (mitophagy) induced by dysfunctional lysosome in Npc1 null β cells. Conclusion: Our study revealed that NPC1 played an important role in maintaining normal lysosome function and mitochondria turnover, which ensured establishment of sufficient mitochondria OXPHOS for islet β cells differentiation and maturation.