Heparan sulfate proteoglycans (HSPGs) consist of a core protein with side chains of the glycosaminoglycan heparan sulfate (HS). We have previously identified (i) the HSPGs syndecan-1 (SDC1), and collagen type XVIII (COL18) inside mouse and human islet beta cells, and (ii) a critical role for HS in beta cell survival and protection from reactive oxygen species (ROS). The objective of this study was to investigate whether endoplasmic reticulum (ER) stress contributes to oxidative stress and type 2 diabetes (T2D) by depleting beta cell HSPGs/HS. A rapid loss of intra-islet/beta cell HSPGs, HS and heparanase (HPSE, an HS-degrading enzyme) accompanied upregulation of islet ER stress gene expression in both young T2D-prone db/db and Akita Ins2WT/C96Y mice. In MIN6 beta cells, HSPGs, HS and HPSE were reduced following treatment with pharmacological inducers of ER stress (thapsigargin or tunicamycin). Treatment of young db/db mice with Tauroursodeoxycholic acid (TUDCA), a chemical protein folding chaperone that relieves ER stress, improved glycemic control and increased intra-islet HSPG/HS. In vitro, HS replacement with heparin (a highly sulfated HS analogue) significantly increased the survival of wild-type and db/db beta cells and restored their resistance to hydrogen peroxide-induced death. We conclude that ER stress inhibits the synthesis/maturation of HSPG core proteins which are essential for HS assembly, thereby exacerbating oxidative stress and promoting beta cell failure. Diminished intracellular HSPGs/HS represent a previously unrecognized critical link bridging ER stress, oxidative stress and beta cell failure in T2D.