Dysfunction of the exocrine pancreas is observed in diabetes, but links between concurrent exocrine and endocrine pancreatic disease and contributing genetic factors are poorly characterized. We studied two families with diabetes and exocrine pancreatic dysfunction by genetic, physiological and in vitro functional studies. A genome-wide screen in Family 1 linked diabetes to chromosome 9q34 (maximal lod score 5.07). Using fecal elastase deficiency as a marker of exocrine pancreatic dysfunction refined the critical chromosomal region to 1.16 Mb (maximal lod score 11.6). Here, we identified a single-base deletion in the variable number of tandem repeats (VNTR)-containing exon 11 of the carboxyl ester lipase (CEL) gene, a major component of pancreatic juice and responsible for the duodenal hydrolysis of cholesterol esters. Screening subjects with maturity-onset diabetes of the young identified Family 2, with another single-base deletion in CEL and a similar phenotype with beta-cell failure and pancreatic exocrine disease. The in vitro catalytic activities of wild-type and mutant CEL protein were comparable. The mutant enzyme was, however, less stable and secreted at a lower rate. Furthermore, we found some evidence for an association between common insertions in the CEL VNTR and exocrine dysfunction in a group of 182 unrelated subjects with diabetes (odds ratio 4.2 (1.6, 11.5)). Our findings link diabetes to the disrupted function of a lipase in the pancreatic acinar cells.