Insulin promoter factor 1 (IPF1), a member of the homeodomain protein family, serves an early role in pancreas formation, as evidenced by the lack of pancreas formation in mice carrying a targeted disruption of the IPF1 gene [Jonsson, J., Carlsson, L., Edlund, T. & Edlund, H. (1994) Nature (London) 371, 606-609]. In adults, IPF1 expression is restricted to the beta-cells in the islets of Langerhans. We report here that IPF1 induces expression of a subset of beta-cell-specific genes (insulin and islet amyloid polypeptide) when ectopically expressed in clones of transformed pancreatic islet alpha-cells. In contrast, expression of IPF1 in rat embryo fibroblasts factor failed to induce insulin and islet amyloid polypeptide expression. This is most likely due to the lack of at least one other essential insulin gene transcription factor, the basic helix-loop-helix protein Beta 2/NeuroD, which is expressed in both alpha- and beta-cells. We conclude that IPF1 is a potent transcriptional activator of endogenous insulin genes in non-beta islet cells, which suggests an important role of IPF1 in beta-cell maturation.