Heterozygous variants in the hepatocyte nuclear factor 1a (HNF1a) cause MODY3 (maturity-onset diabetes of the young, type 3). In this study, we found a case of novel HNF1a p.Gln125* (HNF1a-Q125ter) variant clinically. However, the molecular mechanism linking the new HNF1a variant to impaired islet β-cell function remains unclear. Firstly, a similar HNF1a-Q125ter variant in zebrafish () was generated by CRISPR/Cas9. We further crossed with several zebrafish reporter lines to investigate pancreatic β-cell function. Next, we introduced HNF1a-Q125ter and HNF1a shRNA plasmids into the Ins-1 cell line and elucidated the molecular mechanism. zebrafish significantly decreased the β-cell number, insulin expression, and secretion. Moreover, β cells in dilated ER lumen and increased the levels of ER stress markers. Similar ER-stress phenomena were observed in an HNF1a-Q125ter-transfected Ins-1 cell. Follow-up investigations demonstrated that HNF1a-Q125ter induced ER stress through activating the PERK/eIF2a/ATF4 signaling pathway. Our study found a novel loss-of-function HNF1a-Q125ter variant which induced β-cell dysfunction by activating ER stress via the PERK/eIF2a/ATF4 signaling pathway.