Hepatocyte nuclear factor 1α (HNF1α) and HNF1β (or vHNF1) are closely related transcription factors expressed in liver, kidney, gut, and pancreatic β-cells. Many HNF1 target genes are involved in carbohydrate metabolism. Human mutations in HNF1α or HNF1β lead to maturity-onset diabetes of the young (MODY3 and MODY5, respectively), and patients present with impaired glucose-stimulated insulin secretion. The underlying defect in MODY5 is not known. Analysis of HNF1β deficiency in mice has not been possible because HNF1β null mice die in utero. To examine the role of HNF1β in glucose homeostasis, viable mice deleted for HNF1β selectively in β-cells (β/H1β-KO mice) were generated using a Cre-LoxP strategy. β/H1β-KO mice had normal growth, fertility, fed or fasted plasma glucose and insulin levels, pancreatic insulin content, and insulin sensitivity. However, β/H1β-KO mice exhibited impaired glucose tolerance with reduced insulin secretion compared with wild-type mice but preserved a normal insulin secretory response to arginine. Moreover, β/H1β-KO islets had increased HNF1α and Pdx-1, decreased HNF4 mRNA levels, and reduced glucose-stimulated insulin release. These results indicate that HNF1β is involved in regulating the β-cell transcription factor network and is necessary for glucose sensing or glycolytic signaling.