The total pancreatic beta cell mass is reduced in individuals with type 2 diabetes. We analyzed the islets of leptin receptor-deficient (Lepr-/-) mice, a model animal for type 2 diabetes with obesity. The plasma insulin levels in Lepr-/- mice peaked at approximately 7 weeks, an age at which the animals manifest normoglycemia to moderate hyperglycemia. Consistent with this, the beta cell mass was enlarged as compared with Lepr+/- mice, and it decreased thereafter. Thus, we focused on the islets of Lepr-/- mice at 7 weeks to elucidate the mechanism underlying beta cell failure. Endoplasmic reticulum (ER) stress was enhanced in beta cells of Lepr-/- mice at 7 weeks, as indicated by the increase in c-Jun and eIF2 alpha phosphorylation. Lepr-/- mice also exhibited a reduction in insulin signaling in beta cells at 7 weeks, as indicated by the decrease in Akt phosphorylation. These results indicate that both augmented ER stress and reduced insulin signaling occur before the onset of frank diabetes. Next, to examine the mutual effect of ER stress and insulin signaling in beta cells in vitro, we used MIN6 insulinoma cells. Tunicamycin induced ER stress as well as inhibited insulin signaling. Conversely, the PI-3 kinase inhibitor, LY294002, enhanced ER stress. Furthermore, the reduction in insulin signaling by LY294002 facilitated the induction of ER stress with tunicamycin. Taken together, we concluded that both ER stress and reduced insulin signaling might synergistically affect pancreatic beta cell dysfunction.