Prolonged elevated levels of free fatty acids (FFAs) contribute to the impairment of insulin secretion function of pancreatic β cells, a hallmark of type 2 diabetes, which is partly attributed to the dysfunction of G-protein-coupled receptor 40 (GPR40) signaling. Pollen Typhae total flavone (PTF), an extract from a Chinese herbal medicine named Pollen Typhae, has been reported to effectively treat type 2 diabetes, but the underlying mechanisms remain to be fully elucidated. In the present study, palmitic acid (PA), a saturated fatty acid, severely impaired glucose-stimulated insulin secretion (GSIS) in a time-dependent manner in INS-1 cells, and PTF treatment prevented the impairment in a dose-dependent manner. Moreover, PTF improved insulin secretion function in rats presenting with type 2 diabetes induced by a high-fat diet and low-dose streptozotocin. Furthermore, PA exposure for 24 h decreased the protein expression of GPR40, phospholipase C (PLC)β1, PLCβ3, and protein kinase C (PKC), and inhibited the activity of PLC and PKC stimulated by GW9508, a GPR40 agonist. In addition, PTF enhanced the protein expression of GPR40 and to a certain extent strengthened the protein expression of PKC, increased cellular levels of triphosphoinositide (IP3) and diacylglycerol (DAG), and promoted GW9508-stimulated activity of PLC and PKC reduced by PA in INS-1 cells, which were blocked by PLC inhibitor U-73122 and PKC inhibitor staurosporine, respectively. Additionally, the improvement in PA-induced impairment of GSIS by PTF in INS-1 cells was restrained by U-73122, staurosporine, and calcium channel inhibitor nifedipine, respectively. The results indicate that PTF exerts a protective role against PA-induced impairment of GSIS involving GPR40 signaling in INS-1 cells.