The endoplasmic reticulum (ER) transmits apoptotic signals in the pancreas during ER stress, implicating ER stress–mediated apoptosis in the development of diabetes. P58^IPK (DNAJC3) is induced during ER stress and functions as a negative feedback component to inhibit eIF-2α signaling and attenuate the later phases of the ER stress response. To gain insight into a more comprehensive role of P58^IPK function, we generated deletion mutant mice that showed a gradual onset of glucosuria and hyperglycemia associated with increasing apoptosis of pancreatic islet cells. Lack of P58^IPK had no apparent effect on the functional integrity of viable β-cells. A set of genes associated with apoptosis showed altered expression in pancreatic islets from P58^IPK-null mice, further substantiating the apoptosis phenotype. The data provide in vivo evidence to support the concept that P58^IPK functions as a signal for the downregulation of ER-associated proteins involved in the initial ER stress response, thus preventing excessive cell loss by degradation pathways. Insulin deficiency associated with the absence of P58^IPK mimics β-cell failure associated with type 1 and late-stage type 2 diabetes. P58^IPK function and activity may therefore provide a novel area of investigation into ER-mediated mechanistic and therapeutic approaches for diabetes.