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Many long noncoding RNAs (lncRNAs) are enriched in pancreatic islets and several lncRNAs are linked to type 2 diabetes (T2D). Although they have emerged as potential players in β-cell biology and T2D, little is known about their functions and mechanisms in human β-cells. We identified an islet-enriched lncRNA, TUNAR (TCL1 upstream neural differentiation-associated RNA), which was upregulated in β-cells of patients with T2D and promoted human β-cell proliferation via fine-tuning of the Wnt pathway. TUNAR was upregulated following Wnt agonism by a glycogen synthase kinase-3 (GSK3) inhibitor in human β-cells. Reciprocally, TUNAR repressed a Wnt antagonist Dickkopf-related protein 3 (DKK3) and stimulated Wnt pathway signaling. DKK3 was aberrantly expressed in β-cells of patients with T2D and displayed a synchronized regulatory pattern with TUNAR at the single cell level. Mechanistically, DKK3 expression was suppressed by the repressive histone modifier enhancer of zeste homolog 2 (EZH2). TUNAR interacted with EZH2 in β-cells and facilitated EZH2-mediated suppression of DKK3 . These findings reveal a novel cell-specific epigenetic mechanism via islet-enriched lncRNA that fine-tunes the Wnt pathway and subsequently human β-cell proliferation. NEW & NOTEWORTHY The discovery that long noncoding RNA TUNAR regulates β-cell proliferation may be important in designing new treatments for diabetes.