Perturbation of endoplasmic reticulum (ER) proteostasis is associated with impairment of cellular function in diverse diseases, especially the function of pancreatic β cells in type 2 diabetes. Restoration of ER proteostasis by small molecules shows therapeutic promise for type 2 diabetes. Here, using cell-based screening, we report identification of a chemical chaperone-like small molecule, KM04794, that alleviates ER stress. KM04794 prevented protein aggregation and cell death caused by ER stressors and a mutant insulin protein. We also found that this compound increased intracellular and secreted insulin levels in pancreatic β cells. Chemical biology and biochemical approaches revealed that the compound accumulated in the ER and interacted directly with the ER molecular chaperone BiP. Our data show that this corrector of ER proteostasis can enhance insulin storage and pancreatic β cell function.