Insulin-induced hypoglycemia is a major barrier to the treatment of type-1 diabetes (T1D). Accordingly, it is important that we understand the mechanisms regulating the circulating levels of glucagon – the body’s principal blood glucose-elevating hormone which is secreted from alpha-cells of the pancreatic islets. Varying glucose over the range of concentrations that occur physiologically between the fed and fuel-deprived states (from 8 to 4 mM) has no significant effect on glucagon secretion in the perfused mouse pancreas or in isolated mouse islets (in vitro) and yet associates with dramatic changes in plasma glucagon in vivo. The identity of the systemic factor(s) that stimulates glucagon secretion remains unknown. Here, we show that arginine-vasopressin (AVP), secreted from the posterior pituitary, stimulates glucagon secretion. Glucagon-secreting alpha-cells express high levels of the vasopressin 1b receptor gene (Avpr1b). Activation of AVP neurons in vivo increased circulating copeptin (the C-terminal segment of the AVP precursor peptide, a stable surrogate marker of AVP) and increased blood glucose; effects blocked by pharmacological antagonism of either the glucagon receptor or vasopressin 1b receptor. AVP also mediates the stimulatory effects of hypoglycemia produced by exogenous insulin and 2-deoxy-D-glucose on glucagon secretion. We show that the A1/C1 neurons of the medulla oblongata drive AVP neuron activation in response to insulin-induced hypoglycemia. Exogenous injection of AVP in vivo increased cytoplasmic Ca²⁺ in alpha-cells (implanted into the anterior chamber of the eye) and glucagon release. Hypoglycemia also increases circulating levels of AVP in humans and this hormone stimulates glucagon secretion from isolated human islets. In patients with T1D, hypoglycemia failed to increase both plasma copeptin and glucagon levels. These findings suggest that AVP is a physiological systemic regulator of glucagon secretion and that this mechanism becomes impaired in T1D.