Glucagon gene transcription in the endocrine pancreas is regulated by at least four cis-acting DNA control elements. We showed previously that G1 is critical for alpha cell-specific expression. G1 contains three AT-rich sequences important for promoter function, which represent candidate binding sites for homeodomain transcription factors. Performing reverse transcription-polymerase chain reaction amplifications with degenerate oligonucleotide primers homologous to the Antennapedia homeobox, cDNA clones corresponding to the caudal-related gene cdx-2/3 were predominantly obtained from glucagon-producing cells and primary non-beta cells. From RNase protection and polymerase chain reaction analyses, cdx-2/3 turned out to be the only caudal-related gene that is expressed at significant levels in cells of the endocrine pancreas. Cdx-2/3 binds with high affinity to an AT-rich motif of G1, which matches the consensus binding site of caudal-related proteins. In the glucagon-producing hamster cell line InR1G9, Cdx-2/3 is a subunit of complex B3 formed on G1. Alternative splicing generates two cdx-2/3 transcripts in islet cells, coding for a full-length protein and an amino-terminally truncated isoform. Although both isoforms bind G1 with similar affinity, only the full-length Cdx-2/3 A protein activates glucagon gene transcription in non-glucagon-producing cells, transcriptional activation being dose-dependent. We therefore conclude that the caudal-related gene cdx-2/3 is implicated in the transcriptional control of glucagon gene expression in the alpha cells of the islets of Langerhans.