Insulin promoter factor 1 (IPF1), is a homeodomain protein which, in the adult mouse pancreas, is selectively expressed in beta-cells, and which binds to, and transactivates, the insulin promoter via the P1 element. In mouse embryos, IPF1 expression is initiated when the foregut endoderm commits to a pancreatic fate, i.e. prior to both morphogenesis and hormone specific gene expression. At later stages of development the expression is restricted to the dorsal and ventral walls of the primitive foregut at the positions where the pancreases will form. Mice homozygous for a targeted mutation in the Ipf1 gene selectively lack the pancreas. The mutant pups develop to term and are born alive, but die after a few days. The gastrointestinal tract with its associated organs show no obvious malformations. No pancreatic tissue and no ectopic expression of insulin or pancreatic amylase could be detected in this region in mutant neonates or embryos. These findings demonstrate that IPF1 is needed for the formation of the pancreas, and suggest that IPF1 acts to determine the fate of common pancreatic precursor cells and/or to regulate their propagation. The lack of a pancreas in the Ipf1-deficient mutants, the pattern of IPF1 expression and its ability to stimulate insulin gene transcription, strongly suggest that IPF1 functions both in the early specification of the primitive gut to a pancreatic fate and in the maturation of the pancreatic beta-cell.