Lipotoxicity refers to cellular dysfunctions caused by elevated free fatty acid levels playing a central role in the development and progression of obesity related diseases. Saturated fatty acids cause insulin resistance and reduce insulin production in the pancreatic islets, thereby generating a vicious cycle, which potentially culminates in type 2 diabetes. The underlying endoplasmic reticulum (ER) stress response can lead to even β-cell death (lipoapoptosis). Since improvement of β-cell viability is a promising anti-diabetic strategy, the protective effect of metformin, a known insulin sensitizer was studied in rat insulinoma cells. Assessment of palmitate-induced lipoapoptosis by fluorescent microscopy and by detection of caspase-3 showed a significant decrease in metformin treated cells. Attenuation of β-cell lipotoxicity was also revealed by lower induction/activation of various ER stress markers, e.g. phosphorylation of eukaryotic initiation factor 2α (eIF2α), c-Jun N-terminal kinase (JNK), insulin receptor substrate-1 (IRS-1) and induction of CCAAT/enhancer binding protein homologous protein (CHOP). Our results indicate that the β-cell protective activity of metformin in lipotoxicity can be at least partly attributed to suppression of ER stress.