The mammalian homeobox gene pdx-1 is expressed in pluripotent precursor cells in the dorsal and ventral pancreatic bud and duodenal endoderm, which will produce the pancreas and the rostral duodenum. In the adult, pdr-1 is expressed principally within insulin-secreting pancreatic islet β cells and cells of the duodenal epithelium. Our objective in this study was to localize sequences within the mouse pdx-1 gene mediating selective expression within the islet. Studies of transgenic mice in which a genomic fragment of the mouse pdx-1 gene from kb-4.5 to+ 8.2 was used to drive a β-galactosidase reporter showed that the control sequences sufficient for appropriate developmental and adult specific expression were contained within this region. Three nuclease-hypersensitive sites, located between bp-2560 and-1880 (site 1), bp-1330 and-800 (site 2), and bp-260 and+ 180 (site 3), were identified within the 5′-flanking region of the endogenous pdx-1 gene. Pancreatic β-cell-specific expression was shown to be controlled by sequences within site 1 from an analysis of the expression pattern of various pdr-1-herpes simplex virus thymidine kinase promoter expression constructs in transfected β-cell and non-β-cell lines. Furthermore, we also established that this region was important in vivo by demonstrating that expression from a site 1-driven β-galactosidase reporter construct was directed to islet β-cells in transgenic mice. The activity of the site 1-driven constructs was reduced substantially in β-cell lines by mutating a hepatocyte nuclear factor 3 (HNF3)-like site located between nucleotides-2007 and-1996. Gel shift analysis indicated that HNF3β present in islet β cells binds to this element. Immunohistochemical studies revealed that HNF3β was present within the nuclei of almost all islet β cells and subsets of pancreatic acinar cells. Together, these results suggest that HNF3β, a key regulator of endodermal cell lineage development, plays an essential role in the cell-type-specific transcription of the pdx-1 gene in the pancreas.