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Congenital heart defects are the most prevalent human birth defects, and their incidence is exacerbated by maternal health conditions, such as diabetes during the first trimester (pregestational diabetes). Our understanding of the pathology of these disorders is hindered by a lack of human models and the inaccessibility of embryonic tissue. Using an advanced human heart organoid system, we simulated embryonic heart development under pregestational diabetes–like conditions. These organoids developed pathophysiological features observed in mouse and human studies before, including ROS-mediated stress and cardiomyocyte hypertrophy. scRNA-seq revealed cardiac cell-type-specific dysfunction affecting epicardial and cardiomyocyte populations and alterations in the endoplasmic reticulum and very-long-chain fatty acid lipid metabolism. Imaging and lipidomics confirmed these findings and showed that dyslipidemia was linked to fatty acid desaturase 2 mRNA decay dependent on IRE1-RIDD signaling. Targeting IRE1 or restoring lipid levels partially reversed the effects of pregestational diabetes, offering potential preventive and therapeutic strategies in humans.