Mutations in the hepatocyte nuclear factor (HNF)-1 alpha gene cause maturity-onset diabetes of the young (MODY), type 3. To estimate the prevalence of MODY3 in Norwegian diabetic pedigrees, we screened a total of 130 families for HNF-1 alpha mutations; 42 families with clinical MODY, 75 with suspected MODY, and 13 pedigrees with multiplex type 1 diabetes. Twenty-two families with clinical MODY, 15 families with suspected MODY, and one family with type 1 diabetes multiplex harbored HNF-1 alpha mutations. Thus, in about half of Norwegian families with clinical MODY, mutations in the HNF-1 alpha gene could be detected. Eight of the 18 different mutations identified were novel (G47E, T196fsdelCCAA, IVS3-1G>A, S256T, A276D, S445fsdelAG, M522V, and S531T). Haplotypes were determined for recurrent mutations, indicating a founder effect in Norway for the hot-spot mutation P291fsinsC and possibly also for P112L and R131W. To examine the molecular mechanisms underlying MODY3, we investigated the functional properties of 13 HNF-1 alpha mutations. Two mutant HNF-1 alpha proteins (R171X, R263C) were unable to bind DNA and at least five mutants (R131W, R171X, P379fsdelCT, S445fsdelAG, and Q466X) showed defective nuclear translocation. Transcriptional activation was reduced for most of the MODY3-associated mutants. Accordingly, the functional studies of HNF-1 alpha mutants indicate that beta-cell dysfunction in MODY3 is caused by loss-of-function mechanisms like reduced DNA binding, impaired transcriptional activation, and defects in subcellular localization.