KLF11 (TIEG2) is a pancreas-enriched transcription factor that has elicited significant attention because of its role as negative regulator of exocrine cell growth in vitro and in vivo. However, its functional role in the endocrine pancreas remains to be established. Here, we report, for the first time, to our knowledge, the characterization of KLF11 as a glucose-inducible regulator of the insulin gene. A combination of random oligonucleotide binding, EMSA, luciferase reporter, and chromatin immunoprecipitation assays shows that KLF11 binds to the insulin promoter and regulates its activity in beta cells. Genetic analysis of the KLF11 gene revealed two rare variants (Ala347Ser and Thr220Met) that segregate with diabetes in families with early-onset type 2 diabetes, and significantly impair its transcriptional activity. In addition, analysis of 1,696 type 2 diabetes mellitus and 1,776 normoglycemic subjects show a frequent polymorphic Gln62Arg variant that significantly associates with type 2 diabetes mellitus in North European populations (OR ؍ 1.29, P ؍ 0.00033). Moreover, this variant alters the corepressor mSin3A-binding activity of KLF11, impairs the activation of the insulin promoter and shows lower levels of insulin expression in pancreatic beta cells. In addition, subjects carrying the Gln62Arg allele show decreased plasma insulin after an oral glucose challenge. Interestingly, all three nonsynonymous KLF11 variants show increased repression of the catalase 1 promoter, suggesting a role in free radical clearance that may render beta cells more sensitive to oxidative stress. Thus, both functional and genetic analyses reveal that KLF11 plays a role in the regulation of pancreatic beta cell physiology, and its variants may contribute to the development of diabetes.insulin ͉ polymorphisms ͉ TGF- ͉ type 2 diabetes C omponents of both the exocrine and endocrine pancreas are affected by diseases, e.g., pancreatic cancer and type 2 diabetes mellitus (T2DM), which severely compromise both the quality and span of human life. Both glandular compartments share the same cellular origin and early morphogenetic pathways, suggesting a close functional and pathophysiological relationship. For instance, the exocrine-specific transcription factor p48 and the endocrine-specific pancreatic duodenal homeobox gene 1 (PDX-1) are both expressed in the common cell precursor (1); and, under pathological conditions their compartmentalization may be lost, as exemplified by the detection of PDX-1 in pancreatic cancer (2). In fact, T2DM is both a common feature and a risk factor for the subsequent development of pancreatic cancer (3, 4). The TGF--inducible transcription factor KLF11 regulates exocrine cell growth and behaves as a tumor suppressor in pancreatic cancer (ref. 5 and M.E.F.-Z. and R.U., unpublished observation). Because the TGF- signaling pathway is also a major regulator of endocrine cell fate (1, 6), the current study has been designed to define the role of the Sp1-like transcription factor KLF11 in the biology of ...