UFM1 is a member of the ubiquitin like protein family. While the enzymatic cascade of UFM1 conjugation has been elucidated in recent years, the biological function remains largely unknown. In this report we demonstrate that the recently identified C20orf116, which we name UFM1-binding protein 1 containing a PCI domain (UFBP1), and CDK5RAP3 interact with UFM1. Components of the UFM1 conjugation pathway (UFM1, UFBP1, UFL1 and CDK5RAP3) are highly expressed in pancreatic islets of Langerhans and some other secretory tissues. Co-localization of UFM1 with UFBP1 in the endoplasmic reticulum (ER) depends on UFBP1. We demonstrate that ER stress, which is common in secretory cells, induces expression of Ufm1, Ufbp1 and Ufl1 in the beta-cell line INS-1E. siRNA-mediated Ufm1 or Ufbp1 knockdown enhances apoptosis upon ER stress. Silencing the E3 enzyme UFL1, results in similar outcomes, suggesting that UFM1-UFBP1 conjugation is required to prevent ER stress-induced apoptosis. Together, our data suggest that UFM1-UFBP1 participate in preventing ER stress-induced apoptosis in protein secretory cells.