Zinc transporter-8 (ZnT8) primarily functions as a zinc-sequestrating transporter in the insulin-secretory granules (ISGs) of pancreatic β-cells. Loss-of-function mutations in ZnT8 are associated with protection against type-2 diabetes (T2D), but the protective mechanism is unclear. Here, we developed an in-cell ZnT8 assay to track endogenous ZnT8 responses to metabolic and inflammatory stresses applied to human insulinoma EndoC-βH1 cells. Unexpectedly, high glucose and free fatty acids did not alter cellular ZnT8 levels, but proinflammatory cytokines acutely, reversibly, and gradually down-regulated ZnT8. Approximately 50% of the cellular ZnT8 was localized to the endoplasmic reticulum (ER), which was the primary target of the cytokine-mediated ZnT8 down-regulation. Transcriptome profiling of cytokine-exposed β-cells revealed an adaptive unfolded protein response (UPR) including a marked immunoproteasome activation that coordinately degraded ZnT8 and insulin over a 1,000-fold cytokine concentration range. RNAi-mediated knockdown protected cells against cytokine cytotoxicity, whereas inhibiting immunoproteasomes blocked cytokine-induced ZnT8 degradation and triggered a transition of the adaptive UPR to cell apoptosis. Hence, cytokine-induced down-regulation of the ER ZnT8 level promotes adaptive UPR, acting as a protective mechanism that decongests the ER burden of ZnT8 to protect β-cells from proapoptotic UPR during chronic low-grade inflammation.