An elucidation of the key regulatory factors in pancreas development is critical for understanding the pathogenesis of diabetes mellitus. This study examined whether a specific regulatory mechanism that exists in neuronal development also plays a role in the pancreas. In non-neuronal cells, neuron-restrictive silencer factor (NSRF) actively represses gene transcription via a sequence-specific DNA motif known as the neuron-restrictive silencer element (NRSE). This DNA motif has been identified in many genes that are specific markers for cells of neuronal and neuroendocrine lineage. We identified several genes involved in pancreas development that also harbor NRSE-like motifs, including pdx-1, Beta2/NeuroD, and pax4. The paired homeodomain transcription factor Pax4 is implicated in the differentiation of the insulin-producing -cell lineage because disruption of the pax4 gene results in a severe deficiency of -cells and the manifestation of diabetes mellitus in mice. The NRSE-like motif identified in the upstream pax4 promoter is highly conserved throughout evolution, forms a DNA-protein complex with NRSF, and confers NRSF-dependent transcriptional repression in the context of a surrogate gene promoter. This cis-activating NRSE element also confers NRSF-dependent modulation in the context of the native pax4 gene promoter. Together with earlier reports, these new findings suggest an important functional role for NRSF in the expression of the pax4 gene and infer a role for NRSF in pancreatic islet development.Pancreas development appears to follow a precise pattern of gene expression events characterized by temporal and spatial specificity. As such, a hierarchical model of transcription factor gene expression has evolved based on phenotypic observations from specific knock-out and transgenic animal studies. An interpretation of these data is illustrated in Fig. 1 (see "Results") (1). Several transcription factors that are essential for -cell differentiation are also involved in the neuronal development program. For example, the expression of Beta2⁄NeuroD is necessary for terminal differentiation of all endocrine cell types similar to its requirement for the differentiation of neurons in the brain (1). Similarities between islet and neuronal cells also exist at the level of physiology, such as in their electrical excitability and secretory vesicle functions. In addition to these similarities in differentiation and phenotypic profiles, the likelihood of the existence of additional molecular parallels is strong. Here we investigated whether the NRSE/NRSF 1 transcriptional repressor mechanism is involved in islet cell gene expression coincident with its role in neuron-specific gene regulation.The cis-regulatory NRSE is a 21-bp motif that confers transcriptional repression of genes in many non-neuronal cell types (2, 3). Inhibition of NRSF binding to the NRSE in differentiating neurons permits transcriptional expression of these genes and facilitates terminal differentiation of neuronal lineages through neuron-specific...