Islet antigen-2 (IA-2) is a major autoantigen in type I diabetes. To throw light on the function of IA-2 we examined the role of ia2, a Drosophila homologue, during Drosophila development. In situ hybridization showed that ia2 was expressed in the central nervous system and midgut region. The neuronal expression pattern of ia2 was very similar to that of IA-2 in mammals. Disruption of gut-specific ia2 expression by double stranded RNA interference (dsRNAi) resulted in defects in gut development, and this phenotype was rescued by overexpression of hexokinase. Until now the roles of IA-2 and hexokinase in insulin signaling have been described separately but we found that ia2 modulated the expression of both insulin and hexokinase. Moreover this modulation seems to be important for gut development during metamorphosis. As the pancreas develops from the gut during vertebrate development, our results suggest a possible role of IA-2 in insulin and hexokinase regulation.