The commitment of cells to specific lineages during development is determined in large part by the relative expression of various homeodomain (HOX) selector proteins, which mediate the activation of distinct genetic programs. But the mechanisms by which individual HOX genes are themselves targeted for expression in different cell types remain largely uncharacterized. Here, we demonstrate that STF-1, a homeodomain protein that functions in pancreatic morphogenesis and in glucose homeostasis is encoded by an "orphan" homeobox gene on mouse chromosome 5. When fused to a beta-galactosidase reporter gene, a 6.5-kilobase genomic fragment of 5'-flanking sequence from the STF-1 gene shows pancreatic islet specific activity in transgenic mice. Two distinct elements within the STF-1 promoter are required for islet-restricted expression: a distal enhancer sequence located between -3 and -6.5 kilobases and a proximal E-box sequence located at -104, which is recognized primarily by the helix loop helix/leucine zipper nuclear factor USF. As point mutation within the -104 E-box that disrupt USF binding correspondingly impair STF-1 promoter activity, our results demonstrate that USF is an important component of the regulatory apparatus which directs STF-1 expression to pancreatic islet cells.