The endoplasmic reticulum (ER) plays a multifunctional role in lipid biosynthesis, calcium storage, protein folding, and processing. Thus, maintaining ER homeostasis in insulin-secreting beta-cells is essential. Several pathophysiological conditions and pharmacological agents disrupt the ER homeostasis, thereby causing ER stress. The cells react to ER stress by initiating an adaptive signaling process called the unfolded protein response (UPR). However, the ER initiates death signaling pathways whenever the ER stress persists. ER stress has been linked to several diseases, such as cancers, obesity, and diabetes. Thus, the regulation of ER stress may provide possible therapeutic targets for many diseases. Current evidence suggests that chronic hyperglycemia and hyperlipidemia linked to type II diabetes disrupt ER homeostasis, resulting in irreversible UPR activation and cells death. Despite much progress in understanding the pathophysiology of UPR and ER stress, to date, the mechanisms of ER stress in relation to type II diabetes remain unclear. This review provided up-to-date information regarding the current status of UPR, ER stress mechanisms, insulin dysfunction, oxidative stress, and the therapeutic potential of targeting specific ER stress pathways.