Insulin-induced hypoglycemia is a major treatment barrier in type-1 diabetes (T1D). Accordingly, it is important that we understand the mechanisms regulating the circulating levels of glucagon. Varying glucose over the range of concentrations that occur physiologically between the fed and fuel-deprived states (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 increases in plasma glucagon. The identity of the systemic factor(s) that elevates circulating glucagon remains unknown. Here, we show that arginine-vasopressin (AVP), secreted from the posterior pituitary, stimulates glucagon secretion. Alpha-cells express high levels of the vasopressin 1b receptor (V1bR) gene (Avpr1b). Activation of AVP neurons in vivo increased circulating copeptin (the C-terminal segment of the AVP precursor peptide) and increased blood glucose; effects blocked by pharmacological antagonism of either the glucagon receptor or V1bR. 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. AVP injection increased cytoplasmic Ca2+ in alpha-cells (implanted into the anterior chamber of the eye) and glucagon release. Hypoglycemia also increases circulating levels of AVP/copeptin in humans and this hormone stimulates glucagon secretion from human islets. In patients with T1D, hypoglycemia failed to increase both copeptin and glucagon. These findings suggest that AVP is a physiological systemic regulator of glucagon secretion and that this mechanism becomes impaired in T1D.