X-box binding protein 1 (XBP1) is a member of the CREB/ATF basic region leucine zipper family transcribed as the unspliced isoform (XBP1-u), which, upon exposure to endoplasmic reticulum stress, is spliced into its spliced isoform (XBP1-s). XBP1-s interacts with the cAMP response element of major histocompatibility complex class II gene and plays critical role in unfolded protein response (UPR) by regulating the transcriptional activity of genes involved in UPR. XBP1-s is also involved in other physiological pathways, including lipid metabolism, insulin metabolism, and differentiation of immune cells. Its aberrant expression is closely related to inflammation, neurodegenerative disease, viral infection, and is crucial for promoting tumor progression and drug resistance. Meanwhile, recent studies reported that the function of XBP1-u has been underestimated, as it is not merely a precursor of XBP1-s. Instead, XBP-1u is a critical factor involved in various biological pathways including autophagy and tumorigenesis through post-translational regulation. Herein, we summarize recent research on the biological functions of both XBP1-u and XBP1-s, as well as their relation to diseases.