IRE1β is an ER stress sensor uniquely expressed in epithelial cells lining mucosal surfaces. Here, we show that intestinal epithelial cells expressing IRE1β have an attenuated unfolded protein response to ER stress. When modeled in HEK293 cells and with purified protein, IRE1β diminishes expression and inhibits signaling by the closely related stress sensor IRE1α. IRE1β can assemble with and inhibit IRE1α to suppress stress-induced XBP1 splicing, a key mediator of the unfolded protein response. In comparison to IRE1α, IRE1β has relatively weak XBP1 splicing activity, largely explained by a nonconserved amino acid in the kinase domain active site that impairs its phosphorylation and restricts oligomerization. This enables IRE1β to act as a dominant-negative suppressor of IRE1α and affect how barrier epithelial cells manage the response to stress at the host–environment interface.