Development of the mammalian pancreas has been studied extensively in mice. The stages from budding of the pancreatic anlaga through endocrine and exocrine cell differentiation and islet formation have been described in detail. Recently, the homeodomain transcription factor PDX-1 has been identified as an important factor in the proliferation and differentiation of the pancreatic buds to form a mature pancreas. To evaluate the possibility of using zebrafish as a model for the genetic analysis of pancreas development, we have cloned and characterized PDX-1 from this organism. The deduced sequence of zebrafish PDX-1 contains 246 amino acids and is 95% identical to mammalian PDX-1 in the homeodomain. We also cloned zebrafish preproinsulin complementary DNA as a marker for islet tissue. By in situ hybridization we demonstrate that PDX-1 and insulin are coexpressed during embryonic development and in adults, although PDX-1 expression appears to be biphasic. Insulin expression apparently begins before 44 hpf, the earliest stage examined in this study. Additionally, very high levels of PDX-1 expression were observed in the pyloric caeca, the accessory digestive organs that also are derived from the proximal region of the intestine in teleosts. Finally, our data show that the evolutionary conservation of zebrafish PDX-1 extends to its DNA binding properties. Zebrafish PDX-1 was equally as effective as mouse PDX-1 in stimulating insulin gene transcription, and maximum promoter activation was dependent on the presence of four intact A elements. The demonstration of this capability suggests that transcriptional regulatory mechanisms that control pancreatic development and insulin gene expression have been conserved among vertebrates.