Chronic exposure of pancreatic islet beta-cell lines to supraphysiologic glucose concentrations causes defects in insulin gene expression and insulin secretion. To determine whether these in vitro phenomena have pathophysiologic relevance in vivo, we studied the Zucker diabetic fatty (ZDF) rat, an animal model of type 2 diabetes. The ZDF animals had relatively higher levels of glycemia and islet insulin mRNA at 6 weeks of age than age-matched Zucker lean control (ZLC) rats. As glycemia increased in 12- and 16-week-old ZDF rats, we observed decrements in glucose-induced insulin secretion during static incubations of pancreatic islets and in insulin mRNA levels, PDX-1 mRNA levels, and PDX-1 protein binding to the insulin promoter compared with age-matched ZLC rats and 6-week-old ZDF rats. To determine whether normalization of blood glucose levels would prevent these defects, ZDF rats were treated with troglitazone beginning at 6 weeks of age. Troglitazone prevented ZDF rats from becoming hyperglycemic and preserved glucose-induced insulin responses. Furthermore, troglitazone-treated ZDF animals had greater levels of insulin and PDX-1 mRNAs compared with untreated ZDF animals of the same ages at 12 and 16 weeks. Our results demonstrate that chronic and progressive hyperglycemia resulting from type 2 diabetes in ZDF rats is associated with loss of insulin and PDX-1 mRNAs and loss of glucose-stimulated insulin secretion. Prevention of hyperglycemia prevented the associated defects in insulin and PDX-1 gene expression and improved insulin secretion. These findings provide the first in vivo evidence that prevention of progressive hyperglycemia in a model of type 2 diabetes preserves insulin and PDX-1 gene expression.