During the onset of diabetes, pancreatic beta cells become unable to produce sufficient insulin to maintain blood glucose within the normal range. Proinflammatory cytokines have been implicated in impaired beta cell function. To understand more about the molecular events that reduce insulin gene transcription, we examined the effects of hyperglycemia alone and together with the proinflammatory cytokine interleukin-1beta (IL-1beta) on signal transduction pathways that regulate insulin gene transcription. Exposure to IL-1beta in fasting glucose activated multiple protein kinases that associate with the insulin gene promoter and transiently increased insulin gene transcription in beta cells. In contrast, cells exposed to hyperglycemic conditions were sensitized to the inhibitory actions of IL-1beta. Under these conditions, IL-1beta caused the association of the same protein kinases, but a different combination of transcription factors with the insulin gene promoter and began to reduce transcription within 2 h; stimulatory factors were lost, RNA polymerase II was lost, and inhibitory factors were bound to the promoter in a kinase-dependent manner.