Dysregulated unfolded protein response (UPR) in β-cells contributes to type 1 diabetes (T1D) pathogenesis. The essential UPR sensor, IRE1α, modulates cell fate and survival through its regulated IRE1α-dependent decay (RIDD) activity or downstream transcriptional effector, XBP1. While blunting IRE1α’s RIDD activity pharmacologically at prediabetic stage prevents diabetes in non-obese diabetic (NOD) mice, β-cell-specific function of XBP1 at different stages of disease remain unknown. Here we show that unlike unstressed mice, deletion of Xbp1 (Xbp1β-/-) in β-cells of NOD mice prior to insulitis protects against diabetes. Histological and transcriptomic analyses indicate that following a transient loss of maturity, β-cells of Xbp1β-/- mice exhibit reduced insulitis, apoptosis, and antigenicity largely phenocopying Ire1αβ-/- mice with no changes in RIDD activity. Comparative transcriptome and gene regulatory network analyses using single-cell RNA sequencing datasets from Ire1αβ-/- and Xbp1β-/- mice reveal a largely shared network with a greater change when comparing Xbp1β-/- to Ire1αβ-/- both at the node and connection level for several regulatory hubs indicative of unique roles of XBP1 independent of IRE1α. Our findings define the role of β-cell IRE1α/XBP1, identify previously unrecognized regulatory networks and nodes of this pathway, and highlight the importance of targeting of XBP1/RIDD axis in a disease stage-specific manner.