Blunted first-phase insulin secretion and insulin deficiency are early signs of -cell dysfunction and diabetes manifestation. Thus, insights into molecular mechanisms that regulate insulin homeostasis might provide entry sites to replenish insulin content and restore -cell function. Here, we identified the insulin inhibitory receptor (short: inceptor; encoded by the gene IIR) as an insulin-binding receptor that regulates insulin stores by lysosomal degradation. Using human induced pluripotent stem cell (iPSC)-derived islets, we show that IIR knockout (KO) results in enhanced stem cell (SC)--cell differentiation, maturation, and survival. Strikingly, extended in vitro culture of IIR KO SC--cells leads to greatly increased insulin content and glucose-stimulated insulin secretion (GSIS). We find inceptor localized to clathrin-coated vesicles close to the plasma membrane (PM) and in the trans-Golgi network (TGN), as well as in secretory granules (SGs), where it acts as a sorting receptor to direct proinsulin and insulin towards lysosomal degradation. Targeting inceptor using a monoclonal antibody increases insulin content and improves SC--cell function. Altogether, our findings revealed basic mechanisms of -cell insulin turnover and identified inceptor as a druggable insulin degradation receptor.