Monogenic diabetes is often misdiagnosed with type 2 diabetes due to overlapping characteristics. This study aimed to discover novel causative mutations of monogenic diabetes in patients with clinically diagnosed type 2 diabetes and to explore potential molecular mechanisms. Whole-exome sequencing was performed on 31 individuals clinically diagnosed with type 2 diabetes. One novel heterozygous mutation (p.Ala2Thr) in INS was identified. It was further genotyped in an additional case–control population (6523 cases and 4635 controls), and this variant was observed in 0.09% of cases. Intracellular trafficking of insulin proteins was assessed in INS1-E and HEK293T cells. p.Ala2Thr preproinsulin-GFP was markedly retained in the endoplasmic reticulum (ER) in INS1-E cells. Activation of the PERK–eIF2α–ATF4, IRE1α–XBP1, and ATF6 pathways as well as upregulated ER chaperones were detected in INS1-E cells transfected with the p.Ala2Thr mutant. In conclusion, we identified a causative mutation in INS responsible for maturity-onset diabetes of the young 10 (MODY10) in a Chinese population and demonstrated that this mutation affected β cell function by inducing ER stress.