Loss of functional $\beta$-cell mass is an essential feature of type 2 diabetes, and recent studies indicate that $\beta$-cell dedifferentiation can result in the loss of functional $\beta$-cell mass. However, the mechanism underlying this $\beta$-cell dedifferentiation has not yet been elucidated. Here, we demonstrate a novel function of PRMT1 in maintaining mature $\beta$-cell function and identity. Prmt1 knock-out in fetal and adult $\beta$-cells induced diabetes which was aggravated by high fat diet-induced metabolic stress. Deletion of Prmt1 in adult $\beta$-cells resulted in the immediate loss of histone H4 arginine 3 asymmetric di-methylation (H4R3me2a) and the subsequent dedifferentiation of $\beta$-cells. The expression of genes involved in mature $\beta$-cell function and identity were robustly downregulated as soon as Prmt1 deletion was induced in adult $\beta$-cells, revealing the early feature of $\beta$-cell dedifferentiation. ChIP-seq and ATAC-seq analyses revealed that PRMT1-dependent H4R3me2a increases chromatin accessibility at the binding sites for CTCF and $\beta$-cell transcription factors. In addition, PRMT1-dependent open chromatin regions show a strong association with the risk of diabetes in humans. In conclusion, our results indicate that PRMT1 plays an essential role in maintaining $\beta$-cell identity by regulating chromatin accessibility.