Endoplasmic reticulum (ER) stress causes pancreatic β-cell dysfunction and contributes to β-cell loss and the progression of type 2 diabetes1, 2. Wolfram syndrome 1 (WFS1) has been shown to be an important regulator of the ER stress signalling pathway3; however, its role in β-cell function remains unclear. Here we provide evidence that WFS1 is essential for glucose- and glucagon-like peptide 1 (GLP-1)-stimulated cyclic AMP production and regulation of insulin biosynthesis and secretion. Stimulation with glucose causes WFS1 translocation from the ER to the plasma membrane, where it forms a complex with adenylyl cyclase 8 (AC8), an essential cAMP-generating enzyme in the β-cell that integrates glucose and GLP-1 signalling4. ER stress and mutant WFS1 inhibit complex formation and activation of AC8, reducing cAMP synthesis and insulin secretion. These findings reveal that an ER-stress-related protein has a distinct role outside the ER regulating both insulin biosynthesis and secretion. The reduction of WFS1 protein on the plasma membrane during ER stress is a contributing factor for β-cell dysfunction and progression of type 2 diabetes.