Summary: Tuning of protein homeostasis through mobilization of the unfolded protein response (UPR) is key to the capacity of pancreatic beta cells to cope with variable demand for insulin. Here, we asked how insulin-degrading enzyme (IDE) affects beta cell adaptation to metabolic and immune stress. C57BL/6 and autoimmune non-obese diabetic (NOD) mice lacking IDE were exposed to proteotoxic, metabolic, and immune stress. IDE deficiency induced a low-level UPR with islet hypertrophy at the steady state, rapamycin-sensitive beta cell proliferation enhanced by proteotoxic stress, and beta cell decompensation upon high-fat feeding. IDE deficiency also enhanced the UPR triggered by proteotoxic stress in human EndoC-βH1 cells. In Ide−/− NOD mice, islet inflammation specifically induced regenerating islet-derived protein 2, a protein attenuating autoimmune inflammation. These findings establish a role of IDE in islet cell protein homeostasis, demonstrate how its absence induces metabolic decompensation despite beta cell proliferation, and UPR-independent islet regeneration in the presence of inflammation.