Diabetes mellitus in early pregnancy increases the risk in infants of birth defects, such as neural tube defects (NTDs), known as diabetic embryopathy. NTDs are associated with hyperglycemia-induced protein misfolding and Caspase-8–induced programmed cell death. The present study shows that misfolded proteins are ubiquitinylated, suggesting that ubiquitin-proteasomal degradation is impaired. Misfolded proteins form aggregates containing ubiquitin-binding protein p62, suggesting that autophagic-lysosomal clearance is insufficient. Additionally, these aggregates contain the neurodegenerative disease-associated proteins α-Synuclein, Parkin, and Huntingtin (Htt). Aggregation of Htt may lead to formation of a death-inducing signaling complex of Hip1, Hippi, and Caspase-8. Treatment with chemical chaperones, such as sodium 4-phenylbutyrate (PBA), reduces protein aggregation in neural stem cells in vitro and in embryos in vivo. Furthermore, treatment with PBA in vivo decreases NTD rate in the embryos of diabetic mice, as well as Caspase-8 activation and cell death. Enhancing protein folding could be a potential interventional approach to preventing embryonic malformations in diabetic pregnancies.