The beta cell-specific glucose-sensitive factor (GSF), which binds the A3 motif of the rat I and human insulin promoters, is modulated by extracellular glucose. A single mutation in the GSF binding site of the human insulin promoter abolishes the stimulation by high glucose only in normal islets, supporting the suggested physiological role of GSF in the glucose-regulated expression of the insulin gene. GSF binding activity was observed in all insulin-producing cells. We have therefore purified this activity from the rat insulinoma RIN and found that a single polypeptide of 45 kDa was responsible for DNA binding. Its amino acid sequence, determined by microsequencing, provided direct evidence that GSF corresponds to insulin promoter factor 1 (IPF-1; also known as PDX-1) and that, in addition to its essential roles in development and differentiation of pancreatic islets and in beta cell-specific gene expression, it functions as mediator of the glucose effect on insulin gene transcription in differentiated beta cells. The human cDNA coding for GSF/IPF-1 has been cloned, its cell and tissue distribution is described. Its expression in the glucagon-producing cell line alpha TC1 transactivates the wild-type human insulin promoter more efficiently than the mutated construct. It is demonstrated that high levels of ectopic GSF/IPF-1 inhibit the expression of the human insulin gene in normal islets, but not in transformed beta TC1 cells. These results suggest the existence of a control mechanism, such as requirement for a coactivator of GSF/IPF-1, which may be present in limiting amounts in normal as opposed to transformed beta cells.