The homeodomain protein IDX-1 appears to be a "master regulator" of pancreas development and beta-cell differentiation and function. In murine gene inactivation models and in a human subject with a homozygous mutation of the IDX-1 gene, the pancreas fails to develop. In the adult endocrine pancreas, IDX-1 is primarily expressed in beta cells, where it is a key factor in the upregulation of insulin gene transcription and appears to have a role in the regulation of the somatostatin, glucokinase, glucose transporter-2, and islet amyloid polypeptide genes. Recent studies also suggest a role for IDX-1 in the neogenesis and proliferation of beta cells. The observed functions of IDX-1 and its downregulation in parallel with insulin in glucose-toxicity models implicate IDX-1 as a potential factor contributing to the pathogenesis of diabetes mellitus. Future directions include the use of conditional gene inactivation to determine more precisely the role of IDX-1 throughout endocrine pancreas differentiation and the exploration of IDX-1 as a potential target for gene therapy of diabetes mellitus.