Hypoglycaemia (low plasma glucose) is a serious and potentially fatal complication of insulin-treated diabetes. In healthy individuals, hypoglycaemia triggers glucagon secretion, which restores normal plasma glucose levels by stimulation of hepatic glucose production. This counterregulatory mechanism is impaired in diabetes. Here we show in mice that therapeutic concentrations of insulin inhibit glucagon secretion by an indirect (paracrine) mechanism mediated by stimulation of intra-islet somatostatin release. Insulin's capacity to inhibit glucagon secretion is lost following genetic ablation of insulin receptors in the somatostatin-secreting δ-cells, when insulin-induced somatostatin secretion is suppressed by dapagliflozin (an inhibitor of sodium-glucose co-tranporter-2; SGLT2) or when the action of secreted somatostatin is prevented by somatostatin receptor (SSTR) antagonists. Administration of these compounds in vivo antagonises insulin's hypoglycaemic effect. We extend these data to isolated human islets. We propose that SSTR or SGLT2 antagonists should be considered as adjuncts to insulin in diabetes therapy.