Carbonyl reductase 1 (CBR1) plays an important role in the detoxification of reactive lipid aldehydes. Oxidative stress has been implicated in the pathogenesis of pancreatic β-cell failure. However, the functional role of CBR1 in pancreatic β-cell failure has not been studied yet. Therefore, we investigated the role of CBR1 in pancreatic β-cell failure under glucotoxic and glucolipotoxic conditions. Under both conditions, knockdown of CBR1 by specific siRNA increased β-cell apoptosis, expression of lipogenic enzymes (such as ACC, FAS, and ABCA1), intracellular lipid accumulation, oxidative stress, ER stress, and nuclear SREBP1c, but decreased glucose-stimulated insulin secretion. In contrast, overexpression of CBR1 showed the opposite effects. The antioxidants N-acetyl-l-cysteine and Tiron, as well as the FAS inhibitor cerulenin, reversed the effects of CBR1 knockdown. Interestingly, the expression level and enzyme activity of CBR1 were significantly decreased in pancreatic islets of db/db mice, compared with those of wild-type mice. In conclusion, CBR1 protects pancreatic β-cells against oxidative stress and promotes their survival in glucotoxicity and glucolipotoxicity.