NCB5OR is a novel flavoheme reductase with a cytochrome b5-like domain at the N-terminus and a cytochrome b5 reductase-like domain at the C terminus. Ncb5or knock-out mice develop insulin deficient diabetes and loss of white adipose tissue. Ncb5or(-/-) mice have impairment of Delta9 fatty acid desaturation with elevated ratios of palmitate to palmitoleate and stearate to oleate. In this study we assess the role of the endoplasmic reticulum (ER) stress response in mediating lipotoxicity in Ncb5or(-/-) mice. The ER stress response was assessed by induction of BiP, ATF3, ATF6, XBP-1, and C/EBP homologous protein (CHOP). Exposure to palmitate, but not oleate or mixtures of oleate and palmitate induced these markers of ER stress to a much greater extent in Ncb5or(-/-) hepatocytes than in wild-type cells. In contrast, Ncb5or(-/-) and Ncb5or(+/+) hepatocytes were equally sensitive to ER stress imposed by increasing concentrations of tunicamycin. In order to assess the role of ER stress in vivo, we prepared mice that lack both NCB5OR and CHOP, a proapoptotic transcription factor important in the ER stress response. Onset of hyperglycemia in the Chop(-/-);Ncb5or(-/-) mice was delayed two weeks beyond that observed in Chop(+/+);Ncb5or(-/-) mice. Taken together these results suggest that ER stress plays a critical role in palmitate-induced lipotoxicity both in vitro and in vivo.