Sustained elevated levels of saturated free fatty acids, such as palmitate, contribute to beta cell dysfunction, a phenomenon aggravated by high glucose levels. The aim of this study was to investigate the mechanisms of palmitate-induced beta cell dysfunction and death, combined or not with high glucose. Protein profiling of INS-1E cells, exposed to 0.5 mmol/L palmitate and combined or not with 25 mmol/L glucose, for 24 h was done by 2D-DIGE, both on full cell lysate and on an enriched endoplasmic reticulum (ER) fraction. Eighty-three differentially expressed proteins (P < 0.05) were identified by MALDI-TOF/TOF mass spectrometry and proteomic results were confirmed by functional assays. 2D-DIGE analysis of whole cell lysates and ER enriched samples revealed a high number of proteins compared to previous reports. Palmitate induced beta cell dysfunction and death via ER stress, hampered insulin maturation, generation of harmful metabolites during triglycerides synthesis and altered intracellular trafficking. In combination with high glucose, palmitate induced increased shunting of excess glucose, increased mitochondrial reactive oxygen species production and an elevation in many transcription-related proteins. This study contributes to a better understanding and revealed novel mechanisms of palmitate-induced beta cell dysfunction and death and may provide new targets for drug discovery.