We describe the cloning from a rat islet somatostatin-producing cell line of a 1.4 kb cDNA encoding a new homeoprotein, IDX-1 (islet/duodenum homeobox-1), with close sequence similarity to the Drosophila melanogaster homeobox protein Antennapedia (Antp) and the Xenopus laevis endoderm-specific homeoprotein XlHbox8. Analyses of IDX-1 mRNA and protein in rat tissues show that IDX-1 is expressed in pancreatic islets and ducts and in the duodenum. In electrophoretic mobility shift assays IDX-1 binds to three sites in the 5' flanking region of the rat somatostatin gene. In co-transfection experiments IDX-1 transactivates reporter constructs containing somatostatin promoter sequences, and mutation of the IDX-1 binding sites attenuates transactivation. Reverse transcription-polymerase chain reaction of islet RNA using degenerate amplimers for mRNAs encoding homeoproteins indicates that IDX-1 is the most abundant of 12 different Antp-like homeodomain mRNAs expressed in adult rat islets. The pattern of expression, relative abundance and transcriptional regulatory activity suggests that IDX-1 may be involved in the regulation of islet hormone genes and in cellular differentiation in the endocrine pancreas and the duodenum.