The transcription factor Gli-similar 3 (Glis3) plays a critical role in the generation of pancreatic ß cells and the regulation insulin gene transcription and has been implicated in the development of several pathologies, including type 1 and 2 diabetes and polycystic kidney disease. However, little is known about the proteins and posttranslational modifications that regulate or mediate Glis3 transcriptional activity. In this study, we identify by mass-spectrometry and yeast 2-hybrid analyses several proteins that interact with the N-terminal region of Glis3. These include the WW-domain-containing HECT E3 ubiquitin ligases, Itch, Smurf2, and Nedd4. The interaction between Glis3 and the HECT E3 ubiquitin ligases was verified by co-immunoprecipitation assays and mutation analysis. All three proteins interact through their WW-domains with a PPxY motif located in the Glis3 N-terminus. However, only Itch significantly contributed to Glis3 polyubiquitination and reduced Glis3 stability by enhancing its proteasomal degradation. Itch-mediated degradation of Glis3 required the PPxY motif-dependent interaction between Glis3 and the WW-domains of Itch as well as the presence of the Glis3 zinc finger domains. Transcription analyses demonstrated that Itch dramatically inhibited Glis3-mediated transactivation and endogenous Ins2 expression by increasing Glis3 protein turnover. Taken together, our study identifies Itch as a critical negative regulator of Glis3-mediated transcriptional activity. This regulation provides a novel mechanism to modulate Glis3-driven gene expression and suggests that it may play a role in a number of physiological processes controlled by Glis3, such as insulin transcription, as well as in Glis3-associated diseases.