The inability of pancreatic β-cells to make sufficient insulin to control blood sugar is a central feature of the aetiology of most forms of diabetes. In this review we focus on the deleterious effects of oxidative stress and endoplasmic reticulum (ER) stress on β-cell insulin biosynthesis and secretion and on inflammatory signalling and apoptosis with a particular emphasis on type 2 diabetes (T2D). We argue that oxidative stress and ER stress are closely entwined phenomena fundamentally involved in β-cell dysfunction by direct effects on insulin biosynthesis and due to consequences of the ER stress-induced unfolded protein response. We summarise evidence that, although these phenomenon can be driven by intrinsic β-cell defects in rare forms of diabetes, in T2D β-cell stress is driven by a range of local environmental factors including increased drivers of insulin biosynthesis, glucolipotoxicity and inflammatory cytokines. We describe our recent findings that a range of inflammatory cytokines contribute to β-cell stress in diabetes and our discovery that interleukin 22 protects β-cells from oxidative stress regardless of the environmental triggers and can correct much of diabetes pathophysiology in animal models. Finally we summarise evidence that β-cell dysfunction is reversible in T2D and discuss therapeutic opportunities for relieving oxidative and ER stress and restoring glycaemic control.