Alterations in ER homeostasis have been implicated in the pathophysiology of obesity and type-2 diabetes (T2D). Acute ER stress induction in the hypothalamus produces glucose metabolism perturbations. However, the neurobiological basis linking hypothalamic ER stress with abnormal glucose metabolism remains unknown. Here, we report that genetic and induced models of hypothalamic ER stress are associated with alterations in systemic glucose homeostasis due to increased gluconeogenesis (GNG) independent of body weight changes. Defective alpha melanocyte-stimulating hormone (α-MSH) production underlies this metabolic phenotype, as pharmacological strategies aimed at rescuing hypothalamic α-MSH content reversed this phenotype at metabolic and molecular level. Collectively, our results posit defective α-MSH processing as a fundamental mediator of enhanced GNG in the context of hypothalamic ER stress and establish α-MSH deficiency in proopiomelanocortin (POMC) neurons as a potential contributor to the pathophysiology of T2D.