Insufficient insulin secretion is a hallmark of type 2 diabetes and has been attributed to beta cell identity loss characterized by decreased expression of several key beta cell genes. The pro-inflammatory factor BMP-2 is upregulated in islets of Langerhans from individuals with diabetes and acts as an inhibitor of beta cell function and proliferation. Exposure to BMP-2 induces expression ofId1-4,Hes-1, andHey-1which are transcriptional regulators associated with loss of differentiation. The aim of this study was to investigate the mechanism by which BMP-2 induces beta cell dysfunction and loss of cell maturity. Mouse islets exposed to BMP-2 for 10 days showed impaired glucose-stimulated insulin secretion and beta cell proliferation. BMP-2-induced beta cell dysfunction was associated with decreased expression of cell maturity and proliferation markers specific to the beta cell such asIns1,Ucn3, andKi67and increased expression ofId1-4,Hes-1, andHey-1. The top 30 most regulated proteins significantly correlated with corresponding mRNA expression. BMP-2-induced gene expression changes were associated with a predominant reduction in acetylation of H3K27 and a decrease in NeuroD1 chromatin binding activity. These results show that BMP-2 induces loss of beta cell maturity and suggest that remodeling of H3K27ac and decreased NeuroD1 DNA binding activity participate in the effect of BMP-2 on beta cell dysfunction.