Protein synthesis is increased by several-fold in stimulated pancreatic beta cells. Synthesis and folding of (pro)insulin takes place in the endoplasmic reticulum (ER), and beta cells trigger the unfolded protein response (UPR) to upgrade the functional capacity of the ER. Prolonged or excessive UPR activation contributes to beta cell dysfunction and death in type 2 diabetes, but there is another side of the UPR that may be of particular relevance for autoimmune type 1 diabetes, namely, the cross-talk between the UPR and innate immunity/inflammation. Recent evidence, discussed in this review, indicates that both saturated fats and inflammatory mediators such as cytokines trigger the UPR in pancreatic beta cells. The UPR potentiates activation of nuclear factor κB, a key regulator of inflammation. Two branches of the UPR, namely IRE1/XBP1s and PERK/ATF4/CHOP, mediate the UPR-induced sensitisation of pancreatic beta cells to the proinflammatory effects of cytokines. This can contribute to the upregulation of local inflammatory mechanisms and the aggravation of insulitis. The dialogue between the UPR and inflammation may provide an explanation for the parallel increase in the prevalence of childhood obesity and type 1 diabetes.