Aims/hypothesis Endoplasmic reticulum (ER) stress has been detected in pancreatic beta cells and in insulinsensitive tissues, such as adipose and liver, in obesitylinked rodent models of type 2 diabetes. The contribution of ER stress to pancreatic beta cell dysfunction in type 2 diabetes is unclear. We hypothesised that increased chaperone capacity protects beta cells from ER stress and dysfunction caused by obesity and improves overall glucose homeostasis. Methods We generated a mouse model that overproduces the resident ER chaperone GRP78 (glucose-regulated protein 78 kDa) in pancreatic beta cells under the control of a rat insulin promoter. These mice were subjected to high-fat diet (HFD) feeding for 20 weeks and metabolic variables and markers of ER stress in islets were measured. Results As expected, control mice on the HFD developed obesity, glucose intolerance and insulin resistance. In contrast, GRP78 transgenic mice tended to be leaner than their non-transgenic littermates and were protected against development of glucose intolerance, insulin resistance and ER stress in islets. Furthermore, islets from transgenic mice had a normal insulin content and normal levels of cell-surface GLUT2 (glucose transporter 2) and the transgenic mice were less hyperinsulinaemic than control mice on the HFD. Conclusions/interpretation These data show that increased chaperone capacity in beta cells provides protection against the pathogenesis of obesity-induced type 2 diabetes by maintaining pancreatic beta cell function, which ultimately improves whole-body glucose homeostasis.