The mammalian homeobox gene pdx-1 is expressed in pluripotent precursor cells in the dorsal and ventral pancreatic bud and duodenal endoderm, which will produce the pancreas and the rostral duodenum. In the adult, pdx-1 is expressed principally within insulin-secreting pancreatic islet b cells and cells of the duodenal epithelium. Our objective in this study was to localize sequences within the mouse pdx-1 gene mediating selective expression within the islet. Studies of transgenic mice in which a genomic fragment of the mouse pdx-1 gene from kb 24.5 to 18.2 was used to drive a b-galactosidase reporter showed that the control sequences sufficient for appropriate developmental and adult specific expression were contained within this region. Three nuclease-hypersensitive sites, located between bp 22560 and 21880 (site 1), bp 21330 and 2800 (site 2), and bp 2260 and 1180 (site 3), were identified within the 5*-flanking region of the endogenous pdx-1 gene. Pancreatic b-cell-specific expression was shown to be controlled by sequences within site 1 from an analysis of the expression pattern of various pdx-1–herpes simplex virus thymidine kinase promoter expression constructs in transfected b-cell and non-b-cell lines. Furthermore, we also established that this region was important in vivo by demonstrating that expression from a site 1-driven b-galactosidase reporter construct was directed to islet b-cells in transgenic mice. The activity of the site 1-driven constructs was reduced substantially in b-cell lines by mutating a hepatocyte nuclear factor 3 (HNF3)-like site located between nucleotides 22007 and 21996. Gel shift analysis indicated that HNF3b present in islet b cells binds to this element. Immunohistochemical studies revealed that HNF3b was present within the nuclei of almost all islet b cells and subsets of pancreatic acinar cells. Together, these results suggest that HNF3b, a key regulator of endodermal cell lineage development, plays an essential role in the cell-type-specific transcription of the pdx-1 gene in the pancreas.