CCAAT/enhancer-binding protein (C/EBP) beta and C/EBPalpha are members of the c/ebp gene family and are highly expressed in mammalian liver and adipose tissue. C/EBPalpha is essential for adipogenesis and neonatal gluconeogenesis, as shown by the C/EBPalpha knockout mouse. C/EBPbeta binds to several sequences of the phosphoenolpyruvate carboxykinase (PEPCK) gene promoter with high affinity, and C/EBPbeta protein is increased 200% in the livers of streptozotocin-diabetic mice, concurrent with increased PEPCK mRNA. To elucidate the role of C/EBPbeta in the control of gluconeogenesis during diabetes, we studied the levels of plasma metabolites and hormones related to energy metabolism during diabetes in adult mice heterozygous and homozygous for a null mutation of the gene for C/EBPbeta. We also examined the expression of PEPCK and glucose 6-phosphatase mRNAs and regulation of blood glucose, including the contribution of gluconeogenesis to blood glucose in c/ebpbeta-/- mice. C/EBPbeta was not essential to basal PEPCK mRNA levels. However, C/EBPbeta deletion affected streptozotocin-diabetic response by: (a) delaying hyperglycemia, (b) preventing the increase of plasma free fatty acids, (c) limiting the full induction of PEPCK and glucose 6-phosphatase genes, and (d) preventing the increase in gluconeogenesis rate. Gel supershifts of transcription factor C/EBPalpha, bound to CRE, P3I, and AF-2 sites of the PEPCK promoter, was not increased in diabetic c/ebpbeta-/- mouse liver nuclei, suggesting that C/EBPalpha does not substitute for C/EBPbeta in the diabetic response of liver gene transcription. These results link C/EBPbeta to the metabolic and gene regulatory responses to diabetes and implicate C/EBPbeta as an essential factor underlying glucocorticoid-dependent activation of PEPCK gene transcription in the intact animal.