One subtype of maturity-onset diabetes of the young (MODY)-3 results from mutations in the gene encoding hepatocyte nuclear factor (HNF)-1 alpha. We generated transgenic mice expressing a naturally occurring dominant-negative form of human HNF-1 alpha (P291fsinsC) in pancreatic beta-cells. A progressive hyperglycemia with age was seen in these transgenic mice, and the mice developed diabetes with impaired glucose-stimulated insulin secretion. The pancreatic islets exhibited abnormal architecture with reduced expression of glucose transporter (GLUT2) and E-cadherin. Blockade of E-cadherin-mediated cell adhesion in pancreatic islets abolished the glucose-stimulated increases in intracellular Ca(2+) levels and insulin secretion, suggesting that loss of E-cadherin in beta-cells is associated with impaired insulin secretion. There was also a reduction in beta-cell number (50%), proliferation rate (15%), and pancreatic insulin content (45%) in 2-day-old transgenic mice and a further reduction in 4-week-old animals. Our findings suggest various roles for HNF-1 alpha in normal glucose metabolism, including the regulation of glucose transport, beta-cell growth, and beta-cell-to-beta-cell communication.