Pax6 transcription factor is required for islet cell number, morphology, and hormone gene expression. The perinatal lethality of Pax6 null mutants has restricted investigation of the role of Pax6 in normal endocrine cell function. Therefore, we devised the conditional inactivation of Pax6 using the Pdx1 and Pax6 regulatory domains to activate Cre in cells of either the entire pancreatic bud or only in endocrine cell lineages, respectively. Mutant pups died few days after birth, suffering from an overt diabetic phenotype that includes hyperglycemia, hypoinsulinemia, weight loss, and ketosis, indicating an essential role for Pax6 in beta cell function. Glucose-transporter type-2 expression was downregulated, but expression of several transcription factors essential for endocrine development was maintained. Our findings support a role for Pax6 activity in maintaining normal beta cell function after birth, but not for beta cell neogenesis during late embryonic development and early postnatal stages.