Endoplasmic reticulum (ER) stress in beta cells induces a signaling network called the unfolded protein response (UPR), which plays a dual role in diabetes. A key regulator of ER-stress and UPR, the orosomucoid 1-like protein 3 (ORMDL3), has been shown to regulate airway remodeling through a major UPR protein, activating transcription factor 6 (ATF6), but the contribution of this regulatory axis to compensatory pancreatic beta cell proliferation in diabetes has not been studied. Here, we detected significantly lower levels of ORMDL3 mRNA in leukocytes of peripheral blood specimens from type 1 diabetes (T1D) children, compared to normal children. Moreover, these ORMDL3 levels in T1D children exhibited further decreases upon follow-up. ORMDL3 levels in islets from NOD mice, a mouse model for T1D in humans, showed a mild increase before diabetes onset, but a gradual decrease subsequently. In high glucose culture, beta cell proliferation, but not apoptosis, was increased by overexpression of ORMDL3 levels, likely mediated by its downstream factor ATF6. Mechanistically, ORMDL3 transcriptionally activated ATF6, which was confirmed in a promoter reporter assay. Together, our data suggest that ORMDL3 may increase beta cell proliferation through ATF6 as an early compensatory change in response to diabetes.