Differentiation of early foregut endoderm into pancreatic endocrine and exocrine cells depends on a cascade of gene activation events controlled by various transcription factors. Prior in vitro analysis has suggested that the forkhead/winged helix transcription factor Foxa2 (formerly HNF-3beta) is a major upstream regulator of Pdx1, a homeobox gene essential for pancreatic development. Pdx1 is also essential for the maintenance of glucose homeostasis, as its human orthologue, IPF-1, is mutated in a subset of patients with early-onset type 2 diabetes (MODY4). To analyze the Foxa2/Pdx1 regulatory cascade during pancreatic beta-cell differentiation, we used conditional gene ablation of Foxa2 in mice. We demonstrated that the deletion of Foxa2 in beta-cell-specific knockout mice results in downregulation of Pdx1 mRNA and subsequent reduction of PDX-1 protein levels in islets. These data represent the first in vivo demonstration that Foxa2 acts upstream of Pdx1 in the differentiated beta-cell.