IRE1{beta} is an ER stress sensor uniquely expressed in epithelial cells lining mucosal surfaces. Here, we show that intestinal epithelial cells expressing IRE1{beta} have an attenuated response to ER stress. IRE1{beta} assembles with and blocks activation of the closely related and most evolutionarily ancient stress-sensor IRE1 to suppress stress-induced xbp1 splicing, a key mediator of the unfolded protein response. In comparison, IRE1{beta} has weak xbp1 splicing activity, largely explained by a non-conserved amino acid in the kinase domain that impairs its phosphorylation and restricts oligomerization. This enables IRE1{beta} to act as a dominant negative suppressor of IRE1. The inhibitory effect is amplified in cells by disrupting an XBP1-dependent feedback loop regulating stress-induced expression of IRE1. Thus IRE1{beta} functions to negatively regulate IRE1 signaling, perhaps enabling intestinal epithelial cells to manage the response to chronic stress stimuli at the host-environment interface.