Wolfram syndrome, an autosomal recessive disorder associated with diabetes mellitus and optic atrophy, is caused by mutations in the WFS1 gene encoding an endoplasmic reticulum (ER) membrane protein. Herein, we report that pancreatic islets of wfs1-deficient mice exhibit increases in phosphorylation of RNA-dependent protein kinase-like ER kinase, chaperone gene expressions and active XBP1 protein levels, indicating an enhanced ER stress response. We established wfs1-deficient MIN6 clonal beta-cells by crossing wfs1-deficient mice with mice expressing simian virus 40 large T antigen in beta-cells. These cells show essentially the same alterations in ER stress responses as wfs1-deficient islets, which were reversed by re-expression of WFS1 protein or overexpression of GRP78, a master regulator of the ER stress response. In contrast, these changes are not observed in heart, skeletal muscle or brown adipose tissues with WFS1-deficiency. The increased ER stress response was accompanied by reduced BrdU incorporation and increased caspase-3 cleavage, indicating impaired cell cycle progression and accelerated apoptotic processes in the mutant islets. These changes are associated with increased expression of the cell cycle regulator p21(CIP1) in wfs1-deficient islets and clonal beta-cells. Treatment of islets with thapsigargin, an ER stress inducer, caused upregulation of p21(CIP1). In addition, forced expression of p21(CIP1) resulted in reduced MIN6 beta-cell numbers, suggesting the ER stress-induced increase in p21(CIP1) expression to be involved in beta-cell loss in the mutant islets. These data indicate that WFS1-deficiency activates the ER stress response specifically in beta-cells, causing beta-cell loss through impaired cell cycle progression and increased apoptosis.