The early steps of insulin biosynthesis occur in the endoplasmic reticulum (ER), and the β-cell has a highly developed and active ER. All cells regulate the capacity of their ER to fold and process client proteins and they adapt to an imbalance between client protein load and folding capacity (so-called ER stress). Mutations affecting the ER stress-activated pancreatic ER kinase (PERK) and its downstream effector, the translation initiation complex eukaryotic initiation factor 2 (eIF2), have a profound impact on islet cell development, function, and survival. PERK mutations are associated with the Wolcott-Rallison syndrome of infantile diabetes and mutations that prevent the α-subunit of eIF2 from being phosphorylated by PERK, block β-cell development, and impair gluconeogenesis. We will review this and other rare forms of clinical and experimental diabetes and consider the role of ER stress in the development of more common forms of the disease.