Diabetes poses a substantial burden to society as it can lead to serious complications and premature death. The number of cases continues to increase worldwide. Two major causes of diabetes are insulin resistance and insulin insufficiency. Currently, there are few antidiabetic drugs available that can preserve or protect beta-cell function to overcome insulin insufficiency in diabetes. We describe a therapeutic strategy to preserve beta-cell function by overexpression of follistatin (FST) using an AAV vector (AAV8-Ins-FST) in diabetic mouse model. Overexpression of FST in the pancreas of db/db mouse increased beta-cell islet mass, decreased fasting glucose level, alleviated diabetic symptoms, and essentially doubled lifespan of the treated mice. The observed islet enlargement was attributed to beta-cell proliferation as a result of bio-neutralization of myostatin and activin by FST. Overall, our study indicates overexpression of FST in the diabetic pancreas preserves beta-cell function by promoting beta-cell proliferation, opening up a new therapeutic avenue for the treatment of diabetes.