X-box binding protein 1 (XBP1) is a unique basic region leucine zipper (bZIP) transcription factor whose active form is generated by a nonconventional splicing reaction upon disruption of homeostasis in the endoplasmic reticulum (ER) and activation of the unfolded protein response (UPR). XBP1, first identified as a key regulator of major histocompatibility complex (MHC) class II gene expression in B cells, represents the most conserved signaling component of UPR and is critical for cell fate determination in response to ER stress. Here we review recent advances in our understanding of this multifaceted transcription factor in health and diseases.