Damage to the retinal pigment epithelium (RPE) is an early event in the pathogenesis of age-related macular degeneration (AMD). X-box binding protein 1 (XBP1) is a key transcription factor that regulates endoplasmic reticulum (ER) homeostasis and cell survival. This study aimed to delineate the role of endogenous XBP1 in the RPE. Our results show that in a rat model of light-induced retinal degeneration, XBP1 activation was suppressed in the RPE/choroid complex, accompanied by decreased anti-oxidant genes and increased oxidative stress. Knockdown of XBP1 by siRNA resulted in reduced expression of SOD1, SOD2, catalase, and glutathione synthase and sensitized RPE cells to oxidative damage. Using Cre/LoxP system, we generated a mouse line that lacks XBP1 only in RPE cells. Compared to wildtype littermates, RPE-XBP1 KO mice expressed less SOD1, SOD2, and catalase in the RPE, and had increased oxidative stress. At age 3 months and older, these mice exhibited apoptosis of RPE cells, decreased number of cone photoreceptors, shortened photoreceptor outer segment, reduced ONL thickness, and deficit in retinal function. Electron microscopy showed abnormal ultrastructure, Bruch's membrane thickening, and disrupted basal membrane infolding in XBP1-deficient RPE. These results indicate that XBP1 is an important gene involved in regulation of the anti-oxidant defense in the RPE, and that impaired activation of XBP1 may contribute to RPE dysfunction and cell death during retinal degeneration and AMD.