Abstract: Differentiation of early foregut endoderm into pancreatic endocrine and exocrine cells depends on a cascade of gene activation events controlled by various transcription factors. The first molecular marker identified that specifies the early pancreatic epithelium is the homeodomain-containing transcription factor PDX-1. Its absence in mice and humans during development leads to agenesis of the pancreas. Later, it becomes restricted primarily to β cells where it regulates the expression of β cell-specific genes, and, most importantly, mediates the glucose effect on insulin gene transcription. Although exposure of β cells to high glucose concentrations for relatively short periods stimulates insulin gene expression, chronic exposure has adverse effects on many β-cell functions, including insulin gene transcription. These events appear to correlate with pdx-1 gene expression and its ability to bind the insulin gene. We consider that loss of PDX-1 function or altered pdx-1 gene expression due to mutations or functional impairment of transcription factors controlling its expression can lead to diabetes.