Mutations in hepatocyte nuclear factor 1␣ (HNF-1␣) lead to maturity-onset diabetes of the young type 3 as a result of impaired insulin secretory response in pancreatic ␤-cells. The expression of 50 genes essential for normal ␤-cell function was studied to better define the molecular mechanism underlying the insulin secretion defect in Hnf-1␣ ؊/؊ mice. We found decreased steadystate mRNA levels of genes encoding glucose transporter 2 (Glut2), neutral and basic amino acid transporter, liver pyruvate kinase (L-Pk), and insulin in Hnf-1␣ ؊/؊ mice. In addition, we determined that the expression of several islet-enriched transcription factors, including Pdx-1, Hnf-4␣, and Neuro-D1/Beta-2, was reduced in Hnf-1␣ ؊/؊ mice. These changes in pancreatic islet mRNA levels were already apparent in newborn animals, suggesting that loss of Hnf-1␣ function rather than chronic hyperglycemia is the primary cause of the altered gene expression. This expression profile was pancreatic islet-specific and distinct from hepatocytes, where we found normal expression of Glut2, L-Pk, and Hnf-4␣ in the liver of Hnf-1␣ ؊/؊ mice. The expression of small heterodimer partner (Shp-1), an orphan receptor that can heterodimerize with Hnf-4␣ and inhibit its transcriptional activity, was also reduced in Hnf-1␣ ؊/؊ islets. We characterized a 0.58-kb Shp-1 promoter and determined that the decreased expression of Shp-1 may be indirectly mediated by a downregulation of Hnf-4␣. We further showed that Shp-1 can repress its own transcriptional activation by inhibiting Hnf-4␣ function, thereby establishing a feedback autoregulatory loop. Our results indicate that loss of Hnf-1␣ function leads to altered expression of genes involved in glucosestimulated insulin secretion, insulin synthesis, and ␤-cell differentiation.