Chronic free fatty acid (FFA) exposure induces pancreatic β-cell death, which may contribute to the development of type 2 diabetes. The mechanisms involved in FFA-induced cell death are not completely understood. Here we have investigated the effect of FFA on endoplasmic reticulum (ER) stress pathways in INS-1 pancreatic β-cells. INS-1 cells exposed to palmitate for 16–24 h under serum-free conditions showed marked apoptosis and increased protein levels of phosphorylated eukaryotic translation initiation factor 2α (eIF2α), activating transcription factor 4 (ATF4), X box-binding protein 1 (XBP-1), and C/EBP homologous transcription factor (CHOP) compared with control cells. The CHOP transcription factor has been implicated in mediating ER stress-induced apoptosis. Unexpectedly, the levels of the ER chaperone proteins Grp78/BiP and PDI were not affected by palmitate treatment, suggesting that the cell protective aspects of the unfolded protein response (UPR) are not up-regulated by palmitate. Palmitate-treated cells had markedly altered distribution of ER chaperones and altered ER morphology, suggesting that accumulation of misfolded proteins might trigger the ER stress response. In contrast, oleate treatment did not significantly induce the UPR pathways, nor was it as detrimental to INS-1 β-cells. The results suggest that activation of the UPR may significantly contribute to palmitate- but not oleate-induced pancreatic β-cell death.