One subtype of maturity-onset diabetes of the young (MODY)-3 results from mutations in the gene encoding hepatocyte nuclear factor (HNF)-1α. We generated transgenic mice expressing a naturally occurring dominant-negative form of human HNF-1α (P291fsinsC) in pancreatic β-cells. A progressive hyperglycemia with age was seen in these transgenic mice, and the mice developed diabetes with impaired glucose-stimulated insulin secretion. The pancreatic islets exhibited abnormal architecture with reduced expression of glucose transporter (GLUT2) and E-cadherin. Blockade of E-cadherin–mediated cell adhesion in pancreatic islets abolished the glucose-stimulated increases in intracellular Ca²⁺ levels and insulin secretion, suggesting that loss of E-cadherin in β-cells is associated with impaired insulin secretion. There was also a reduction in β-cell number (50%), proliferation rate (15%), and pancreatic insulin content (45%) in 2-day-old transgenic mice and a further reduction in 4-week-old animals. Our findings suggest various roles for HNF-1α in normal glucose metabolism, including the regulation of glucose transport, β-cell growth, and β-cell–to–β-cell communication.