To study the late beta-cell-specific function of the homeodomain protein IPF1/PDX1 we have generated mice in which the Ipf1/Pdx1 gene has been disrupted specifically in beta cells. These mice develop diabetes with age, and we show that IPF1/PDX1 is required for maintaining the beta cell identity by positively regulating insulin and islet amyloid polypeptide expression and by repressing glucagon expression. We also provide evidence that IPF1/PDX1 regulates the expression of Glut2 in a dosage-dependent manner suggesting that lowered IPF1/PDX1 activity may contribute to the development of type II diabetes by causing impaired expression of both Glut2 and insulin.