Type 2 diabetes involves insulin resistance and β-cell failure leading to inadequate insulin secretion. An important component of β-cell failure is cell loss by apoptosis. Apoptosis repressor with caspase recruitment domain (ARC) is an inhibitor of apoptosis that is expressed in cardiac and skeletal myocytes and neurons. ARC possesses the unusual property of antagonizing both the extrinsic (death receptor) and intrinsic (mitochondria/endoplasmic reticulum [ER]) cell death pathways. Here we report that ARC protein is abundant in cells of the endocrine pancreas, including >99.5% of mouse and 73% of human β-cells. Using genetic gain- and loss-of-function approaches, our data demonstrate that ARC inhibits β-cell apoptosis elicited by multiple inducers of cell death, including ER stressors tunicamycin, thapsigargin, and physiological concentrations of palmitate. Unexpectedly, ARC diminishes the ER stress response, acting distal to protein kinase RNA-like ER kinase (PERK) and inositol-requiring protein 1α, to suppress C/EBP homologous protein (CHOP) induction. Depletion of ARC in isolated islets augments palmitate-induced apoptosis, which is dramatically rescued by deletion of CHOP. These data demonstrate that ARC is a previously unrecognized inhibitor of apoptosis in β-cells and that its protective effects are mediated through suppression of the ER stress response pathway.