Type 1 diabetes is preceded by islet β-cell dysfunction, but the mechanisms leading to β-cell dysfunction have not been rigorously studied. Because immune cell infiltration occurs prior to overt diabetes, we hypothesized that activation of inflammatory cascades and appearance of endoplasmic reticulum (ER) stress in β-cells contributes to insulin secretory defects. Prediabetic nonobese diabetic (NOD) mice and control diabetes-resistant NOD-SCID and CD1 strains were studied for metabolic control and islet function and gene regulation. Prediabetic NOD mice were relatively glucose intolerant and had defective insulin secretion with elevated proinsulin:insulin ratios compared with control strains. Isolated islets from NOD mice displayed age-dependent increases in parameters of ER stress, morphologic alterations in ER structure by electron microscopy, and activation of nuclear factor-κB (NF-κB) target genes. Upon exposure to a mixture of proinflammatory cytokines that mimics the microenvironment of type 1 diabetes, MIN6 β-cells displayed evidence for polyribosomal runoff, a finding consistent with the translational initiation blockade characteristic of ER stress. We conclude that β-cells of prediabetic NOD mice display dysfunction and overt ER stress that may be driven by NF-κB signaling, and strategies that attenuate pathways leading to ER stress may preserve β-cell function in type 1 diabetes.