Overexpression of sterol regulatory element-binding protein-1c (SREBP-1c) in β cells causes impaired insulin secretion and β cell dysfunction associated with diminished pancreatic duodenal homeodomain transcription factor-1 (PDX-1) expression in vitro and in vivo. To identify the molecular mechanism responsible for this effect, the mouse Pdx-1 gene promoter (2.7 kb) was analyzed in β cell and non-β cell lines. Despite no apparent sterol regulatory element-binding protein-binding sites, the Pdx-1 promoter was suppressed by SREBP-1c in β cells in a dose-dependent manner. PDX-1 activated its own promoter. The E-box (-104/-99 bp) in the proximal region, occupied by ubiquitously expressed upstream stimulatory factors (USFs), was crucial for the PDX-1-positive autoregulatory loop through direct PDX-1·USF binding. This positive feedback activation was a prerequisite for SREBP-1c suppression of the promoter in non-β cells. SREBP-1c and PDX-1 directly interact through basic helix-loop-helix and homeobox domains, respectively. This robust SREBP-1c·PDX-1 complex interferes with PDX-1·USF formation and inhibits the recruitment of PDX-1 coactivators. SREBP-1c also inhibits PDX-1 binding to the previously described PDX-1-binding site (-2721/-2646 bp) in the distal enhancer region of the Pdx-1 promoter. Endogenous up-regulation of SREBP-1c in INS-1 cells through the activation of liver X receptor and retinoid X receptor by 9-cis-retinoic acid and 22-hydroxycholesterol inhibited PDX-1 mRNA and protein expression. Conversely, SREBP-1c RNAi restored Pdx-1 mRNA and protein levels. Through these multiple mechanisms, SREBP-1c, when induced in a lipotoxic state, repressed PDX-1 expression contributing to the inhibition of insulin expression and β cell dysfunction.