Mutations in the hepatocyte nuclear factor-1α (HNF-1α) have been linked to subtype 3 of maturity-onset diabetes of the young (MODY3), which is characterized by a primary defect in insulin secretion. The role of HNF-1α in the regulation of pancreatic β-cell function was investigated. Gene manipulation allowed graded overexpression of HNF-1α and controlled dominant-negative suppression of HNF-1α function in insulinoma INS-1 cells. We show that HNF-1α is essential for insulin gene transcription, as demonstrated by a pronounced decrease in insulin mRNA expression and in insulin promoter activity under dominant-negative conditions. The expression of genes involved in glucose transport and metabolism including glucose transporter-2 and L-type pyruvate kinase is also regulated by HNF-1α. Loss of HNF-1α function leads to severe defects in insulin secretory responses to glucose and leucine, resulting from impaired glucose utilization and mitochondrial oxidation. The nutrient-evoked ATP production and subsequent changes in plasma membrane potential and intracellular Ca 2+ were diminished by suppression of HNF-1α function. These results suggest that HNF-1α function is essential for maintaining insulin storage and nutrient-evoked release. The defective mitochondrial oxidation of metabolic substrates causes impaired insulin secretion, indicating a molecular basis for the diabetic phenotype of MODY3 patients.