Somatostatin, released from δ-cells within pancreatic islets of Langerhans, is one of the most important negative regulators of islet hormone secretion. We find that islet δ-cells are positioned near, and release somatostatin onto, primary cilia of the other islet cell types, including insulin-secreting β-cells. Somatostatin activates ciliary somatostatin receptors, resulting in rapid lowering of the ciliary cAMP concentration which in turn promotes more sustained nuclear translocation of the cilia-dependent transcription factor GLI2 through a mechanism that operates in parallel with the canonical Hedgehog pathway and depends on ciliary Ca2+ signaling. We also find that primary cilia length is reduced in islets from human donors with type-2 diabetes, which is associated with a reduction in interactions between δ-cells and cilia. Our findings show that islet cell primary cilia constitute an important target of somatostatin action, which endows somatostatin with the ability to regulate islet cell function beyond acute suppression of hormone release.