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The rare <i>SLC30A8</i> mutation encoding a truncating p.Arg138* variant (R138X) in zinc transporter 8 (ZnT8) is associated with a 65% reduced risk for type 2 diabetes. To determine whether ZnT8 is required for beta cell development and function, we derived human pluripotent stem cells carrying the R138X mutation and differentiated them into insulin-producing cells. We found that human pluripotent stem cells with homozygous or heterozygous R138X mutation and the null (KO) mutation have normal efficiency of differentiation towards insulin-producing cells, but these cells show diffuse granules that lack crystalline zinc-containing insulin granules. Insulin secretion is not compromised in vitro by KO or R138X mutations in human embryonic stem cell-derived beta cells (sc-beta cells). Likewise, the ability of sc-beta cells to secrete insulin and maintain glucose homeostasis after transplantation into mice was comparable across different genotypes. Interestingly, sc-beta cells with the <i>SLC30A8</i> KO mutation showed increased cytoplasmic zinc, and cells with either KO or R138X mutation were resistant to apoptosis when extracellular zinc was limiting. These findings are consistent with a protective role of zinc in cell death and with the protective role of zinc in T2D.