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Micropeptides (microproteins) encoded by transcripts previously annotated as long noncoding RNAs (lncRNAs) are emerging as important mediators of fundamental biological processes in health and disease. Here, we applied two computational tools to identify putative micropeptides encoded by lncRNAs that are expressed in the human pancreas. We experimentally verified one such micropeptide encoded by a β cell- and neural cell-enriched lncRNA TCL1 Upstream Neural Differentiation-Associated RNA (TUNAR, also known as TUNA, HI-LNC78, or LINC00617). We named this highly conserved 48-amino-acid micropeptide beta cell- and neural cell-regulin (BNLN). BNLN contains a single-pass transmembrane domain and localizes at the endoplasmic reticulum (ER) in pancreatic β cells. Overexpression of BNLN lowered ER calcium levels, maintained ER homeostasis, and elevated glucose-stimulated insulin secretion in pancreatic β cells. We further assessed the BNLN expression in islets from mice fed a high-fat diet and a regular diet and found that BNLN is suppressed by diet-induced obesity (DIO). Conversely, overexpression of BNLN enhanced insulin secretion in islets from lean and obese mice as well as from humans. Taken together, our study provides the first evidence that lncRNA-encoded micropeptides play a critical role in pancreatic β cell functions and provides a foundation for future comprehensive analyses of micropeptide function and pathophysiological impact on diabetes.