During pancreatic development, the paired homeodomain transcription factor PAX4 is required for the differentiation of the insulin-producing beta cells and somatostatin-producing delta cells. To establish the position of PAX4 in the hierarchy of factors controlling islet cell development, we examined the control of the human PAX4 gene promoter. In both cell lines and transgenic animals, a 4.9-kilobase pair region directly upstream of the human PAX4 gene transcriptional start site acts as a potent pancreas-specific promoter. Deletion mapping experiments demonstrate that a 118-base pair region lying approximately 1.9 kilobase pairs upstream of the transcription start site is both necessary and sufficient to direct pancreas-specific expression. Serial deletions through this region reveal the presence of positive elements that bind several pancreatic transcription factors as follows: the POU homeodomain factor HNF1alpha, the orphan nuclear receptor HNF4alpha, the homeodomain factor PDX1, and a heterodimer composed of two basic helix-loop-helix factors. Interestingly, mutations in the genes encoding four of these factors cause a dominantly inherited form of human diabetes called Maturity Onset Diabetes of the Young. In addition, PAX4 itself has at least two high affinity binding sites within the promoter through which it exerts a strong negative autoregulatory effect. Together, these results suggest a model in which PAX4 expression is activated during pancreatic development by a combination of pancreas-specific factors but is then switched off once PAX4 protein reaches sufficient levels.