Endoplasmic reticulum (ER) stress induces INS-1 cell apoptosis by a pathway involving Ca2+-independent phospholipase A2 (iPLA 2β)-mediated ceramide generation, but the mechanism by which iPLA2β and ceramides contribute to apoptosis is not well understood. We report here that both caspase-12 and caspase-3 are activated in INS-1 cells following induction of ER stress with thapsigargin, but only caspase-3 cleavage is amplified in iPLA2β overexpressing INS-1 cells (OE), relative to empty vector-transfected cells, and is suppressed by iPLA2β inhibition. ER stress also led to the release of cytochrome c and Smac and, unexpectedly, their accumulation in the cytosol is amplified in OE cells. These findings raise the likelihood that iPLA 2β participates in ER stress-induced apoptosis by activating the intrinsic apoptotic pathway. Consistent with this possibility, we find that ER stress promotes iPLA2β accumulation in the mitochondria, opening of mitochondrial permeability transition pore, and loss in mitochondrial membrane potential (Δψ) in INS-1 cells and that these changes are amplified in OE cells. ER stress also led to greater ceramide generation in ER and mitochondria fractions of OE cells. Exposure to ceramide alone induces loss in Δψ and apoptosis and these are suppressed by forskolin. ER stress-induced mitochondrial dysfunction and apoptosis are also inhibited by forskolin, as well as by inactivation of iPLA2β or NSMase, suggesting that iPLA2β-mediated generation of ceramides via sphingomyelin hydrolysis during ER stress affect the mitochondria. In support, inhibition of iPLA2β or NSMase prevents cytochrome c release. Collectively, our findings indicate that the iPLA2β-ceramide axis plays a critical role in activating the mitochondrial apoptotic pathway in insulin-secreting cells during ER stress. © 2008 by The American Society for Biochemistry and Molecular Biology, Inc.