Cytokine-induced beta cell dysfunction is a hallmark of type 2 diabetes (T2D). Chronic exposure of beta cells to inflammatory cytokines affects gene expression and impairs insulin secretion. Thus, identification of anti-inflammatory factors that preserve beta cell function represents an opportunity to prevent or treat T2D. Butyrate is a gut microbial metabolite with anti-inflammatory properties for which we recently showed a role in preventing interleukin-1β (IL-1β)-induced beta cell dysfunction, but how prevention is accomplished is unclear. Here, we investigated the mechanisms by which butyrate exerts anti-inflammatory activity in beta cells. We exposed mouse islets and INS-1E cells to a low dose of IL-1β and/or butyrate and measured expression of inflammatory genes and nitric oxide (NO) production. Additionally, we explored the molecular mechanisms underlying butyrate activity by dissecting the activation of the nuclear factor-κB (NF-κB) pathway. We found that butyrate suppressed IL-1β-induced expression of inflammatory genes, such as Nos2, Cxcl1, and Ptgs2, and reduced NO production. Butyrate did not inhibit IκBα degradation nor NF-κB p65 nuclear translocation. Furthermore, butyrate did not affect binding of NF-κB p65 to target sequences in synthetic DNA but inhibited NF-κB p65 binding and RNA polymerase II recruitment to inflammatory gene promoters in the context of native DNA. We found this was concurrent with increased acetylation of NF-κB p65 and histone H4, suggesting butyrate affects NF-κB activity via inhibition of histone deacetylases. Together, our results show butyrate inhibits IL-1β-induced inflammatory gene expression and NO production through suppression of NF-κB activation and thereby possibly preserves beta cell function.