Type 2 diabetes (T2D) is a common metabolic disease due to insufficient insulin secretion by pancreatic β-cells in the context of insulin resistance. Islet molecular pathology reveals a role for protein misfolding in β-cell dysfunction and loss with islet amyloid derived from islet amyloid polypeptide (IAPP), a protein coexpressed and cosecreted with insulin. The most toxic form of misfolded IAPP is intracellular membrane disruptive toxic oligomers present in β-cells in T2D and in β-cells of mice transgenic for human IAPP (hIAPP). Prior work revealed a high degree of overlap of transcriptional changes in islets from T2D and prediabetic 9- to 10-wk-old mice transgenic for hIAPP with most changes being pro-survival adaptations and therefore of limited therapeutic guidance. Here, we investigated islets from hIAPP transgenic mice at an earlier age (6 wk) to screen for potential mediators of hIAPP toxicity that precede predominance of pro-survival signaling. We identified early suppression of cholesterol synthesis and trafficking along with aberrant intra-β-cell cholesterol and lipid deposits and impaired cholesterol trafficking to cell membranes. These findings align with comparable lipid deposits present in β-cells in T2D and increased vulnerability to develop T2D in individuals taking medications that suppress cholesterol synthesis.NEW & NOTEWORTHY β-Cell failure in type 2 diabetes (T2D) is characterized by β-cell misfolded protein stress due to the formation of toxic oligomers of islet amyloid polypeptide (IAPP). Most transcriptional changes in islets in T2D are pro-survival adaptations consistent with the slow progression of β-cell loss. In the present study, investigation of the islet transcriptional signatures in a mouse model of T2D expressing human IAPP revealed decreased cholesterol synthesis and trafficking as a plausible early mediator of IAPP toxicity.