To find undiscovered signaling mediators of a terminal UPR, we conducted an unbiased screen to discover mRNAs whose translation increases during irremediable ER stress. Through this strategy we identified thioredoxin-interacting protein—TXNIP—as a critical node in a chain of destruction leading from the ER to programmed cell death. Remarkably, IRE1α utilizes a micro-RNA intermediate to control induction of TXNIP mRNA. Induced TXNIP protein in turn activates the NLRP3 inflammasome to cleave Pro-Caspase 1 to its active form, thereby causing maturation and secretion of the inflammatory cytokine, IL-1β. Furthermore, we find that TXNIP action is critical for programmed cell death of pancreatic β-cells under ER stress in vivo, and development of diabetes in rodents. Finally, our work provides pharmacological insights to target this destructive UPR chain at its upstream source, IRE1α, and thereby preserve cell viability and function.