The cis-acting sequences that mediate insulin gene expression exclusively in pancreatic islet beta-cells are localized within the 5'-flanking region between nucleotides -340 and -91. We have identified an evolutionarily conserved, A+T-rich element at -201/-196 basepairs in the rat insulin II gene that is essential for efficient expression in beta-cells. Affinity-purified antibody to the XIHbox 8 protein super-shifted the major beta-cell-activator factor complex binding to the -201/-196 element. XIHbox 8 is a Xenopus endoderm-specific homeodomain protein whose expression is restricted to the nucleus of endodermal cells of the duodenum and developing pancreas. Antibody to XIHbox 8 specifically interacts with a 47-kilodalton protein present in this DNA complex. Immunohistochemical studies revealed XIHbox 8-like proteins within the nucleus of almost all mouse islet beta-cells and a subset of islet alpha- and beta-cells. These results are consistent with the proposal that an XIHbox 8-related homeoprotein of 47 kilodalton is required for expression of the mammalian insulin gene in beta-cells. Experiments conducted with antiserum raised to somatostatin transcription factor-1 (STF-1), a recently isolated mammalian XIHbox 8-related homeoprotein, indicate that the STF-1 protein is the mammalian homolog of Xenopus XIHbox 8.