Diabetes mellitus is among the most common chronic diseases, affecting more than 1 in 10 Americans with about 1.5 million new cases diagnosed each year. Pancreatic beta cell dysfunction is a key factor in numerous forms of diabetes, including Type 1, Type 2, and Cystic Fibrosis-Related Diabetes. There remains a critical need to understand what causes beta cell dysfunction and to establish therapeutic targets to correct it. Micropeptides encoded by transcripts previously annotated as long noncoding RNA (IncRNAs) are emerging as important mediators of fundamental biological processes in health and disease. Our prior work identified a beta cell-enriched lncRNA-encoded micropeptide, Beta cell- and Neural cell-regulin (BNLN), and demonstrated its critical role in pancreatic beta cell function and insulin secretion. Here, we investigated the spatiotemporal expression of endogenous BNLN in the healthy and diseased pancreas. We further sought to identify its functional significance and factors driving changes in its abundance. We find that BNLN primarily localizes to the beta cell in the healthy pancreas, with alterations in abundance and distribution in diabetes through the use of human samples and ferret and mouse models of diabetes. To determine the cell type-specific role of BNLN, we establish a beta cell-specific BNLN knockout mouse model and demonstrate in vivo loss of glycemic control under diet-induced obese conditions These changes are more limited in a lean knockout model. In vitro, we show that a wide array of disease-relevant beta cell stressors drive increased endogenous expression of BNLN and its encoding RNA TUNAR. Collectively, these results establish critical importance for pancreatic micropeptides in maintaining metabolic homeostasis in disease and other challenged states, advancing our understanding of beta cell regulation and stress response mechanisms for the maintenance of systemic function. These results provide a foundation for future comprehensive analyses of micropeptide functions and their pathophysiological impact on diabetes.