The endocrine pancreas is organised as islets of Langerhans embedded in the exocrine tissue and is composed of four cell types: beta, a, d, and g cells producing insulin, glucagon, somatostatin and the pancreatic polypeptide (PP), respectively. Gene knockout studies have shown the involvement of a variety of transcription factors in pancreas development. Null mutations of the homeodomain proteins pdx-1 and isl-1 result in pancreatic agenesis and the absence of the islets of Langerhans, respectively [1,2]. The lack of Beta2, Pax-6, Pax-4, Nk 2.2, and Nk 6.1 affects the organisation of the endocrine pancreas and the number of endocrine cells or both [3±9]. The formation of specific islet cell types can be affected by the absence of any of these factors: no or few glucagon-producing a cells are observed in homozygous pax-6 mutants, whereas pax-4 knockout mice lack beta and d cells; nk 2.2 and nk 6.1 mu-The pancreatic beta-cell-specific transcription factor Pax-4 inhibits glucagon gene expression through Pax-6 Abstract Aims/hypothesis. The paired-homeobox genes pax-4 and pax-6 are crucial for islet development; whereas the null mutation of pax-6 results in the nearly absence of glucagon-producing a cells, pax-4 homozygous mutant mice lack insulin and somatostatin-producing beta and d cells but contain an increased number of a cells suggesting that a cells could develop by a default mechanism. Methods. To investigate whether beta-cell specific factors act negatively on glucagon gene transcription, we ectopically expressed pax-4 in glucagon producing InR1G9 cells; Pax-4 inhibited basal transcription of the glucagon gene promoter by 60 %. To assess the mechanism of this inhibition, we cotransfected the non-islet cell line BHK-21 with Pax-4 and various transcription factors present in a cells.Results. In addition to a general repressor activity on basal glucagon gene promoter activity of 30±50 %, a specific 90 % inhibition of Pax-6 mediated transactivation was observed. In contrast, Pax-4 had no effect on Cdx-2/3 or HNF3a mediated transcriptional activation. Pax-4 showed similar affinity to the Pax-6 binding sites on the glucagon gene promoter compared to Pax-6, but varying with KCl concentrations. Conclusion/interpretation. Pax-4 impairs glucagon gene transcription specifically through inhibition of Pax-6 mediated transactivation. Transcriptional inhibition seems to be mediated by direct DNA binding competition with Pax-6 and potentially additional mechanisms such as protein-protein interactions and a general repressor activity of Pax-4. Glucagon gene expression in a cells could thus result from both the presence of islet cell specific transcription factors and the absence of Pax-4. [Diabetologia (2002) 45: 97±107]