The failure to expand functional pancreatic beta-cell mass in response to increased metabolic demand is a hallmark of type 2 diabetes. Lineage tracing studies indicate that replication of existing beta-cells is the principle mechanism for beta-cell expansion in adult mice. Here we demonstrate that the proliferative response of beta-cells is dependent on the orphan nuclear receptor hepatocyte nuclear factor-4alpha (HNF-4alpha), the gene that is mutated in Maturity-Onset Diabetes of the Young 1 (MODY1). Computational analysis of microarray expression profiles from isolated islets of mice lacking HNF-4alpha in pancreatic beta-cells reveals that HNF-4alpha regulates selected genes in the beta-cell, many of which are involved in proliferation. Using a physiological model of beta-cell expansion, we show that HNF-4alpha is required for beta-cell replication and the activation of the Ras/ERK signaling cascade in islets. This phenotype correlates with the down-regulation of suppression of tumorigenicity 5 (ST5) in HNF-4alpha mutants, which we identify as a novel regulator of ERK phosphorylation in beta-cells and a direct transcriptional target of HNF-4alpha in vivo. Together, these results indicate that HNF-4alpha is essential for the physiological expansion of adult beta-cell mass in response to increased metabolic demand.