A high caloric intake, rich in saturated fats, greatly contributes to the development of obesity, which is the leading risk factor for type 2 diabetes (T2D). A persistent caloric surplus increases plasma levels of fatty acids (FAs), especially saturated ones, which were shown to negatively impact pancreatic β-cell function and survival in a process called lipotoxicity. Lipotoxicity in β-cells activates different stress pathways, culminating in β-cells dysfunction and death. Among all stresses, endoplasmic reticulum (ER) stress and oxidative stress have been shown to be strongly correlated. One main source of oxidative stress in pancreatic β-cells appears to be the reactive oxygen species producer NADPH oxidase (NOX) enzyme, which has a role in the glucose-stimulated insulin secretion and in the β-cell demise during both T1 and T2D. In this review, we focus on the acute and chronic effects of FAs and the lipotoxicity-induced β-cell failure during T2D development, with special emphasis on the oxidative stress induced by NOX, the ER stress, and the crosstalk between NOX and ER stress.