Mutations in hepatocyte nuclear factor 1α (HNF-1α) lead to maturity-onset diabetes of the young type 3 as a result of impaired insulin secretory response in pancreatic β-cells. The expression of 50 genes essential for normal β-cell function was studied to better define the molecular mechanism underlying the insulin secretion defect in Hnf-1α^−/− mice. We found decreased steady-state mRNA levels of genes encoding glucose transporter 2 (Glut2), neutral and basic amino acid transporter, liver pyruvate kinase (L-Pk), and insulin in Hnf-1α^−/− mice. In addition, we determined that the expression of several islet-enriched transcription factors, including Pdx-1, Hnf-4α, and Neuro-D1/Beta-2, was reduced in Hnf-1α^−/− mice. These changes in pancreatic islet mRNA levels were already apparent in newborn animals, suggesting that loss of Hnf-1α function rather than chronic hyperglycemia is the primary cause of the altered gene expression. This expression profile was pancreatic islet–specific and distinct from hepatocytes, where we found normal expression of Glut2, L-Pk, and Hnf-4α in the liver of Hnf-1α^−/− mice. The expression of small heterodimer partner (Shp-1), an orphan receptor that can heterodimerize with Hnf-4α and inhibit its transcriptional activity, was also reduced in Hnf-1α^−/− islets. We characterized a 0.58-kb Shp-1 promoter and determined that the decreased expression of Shp-1 may be indirectly mediated by a downregulation of Hnf-4α. We further showed that Shp-1 can repress its own transcriptional activation by inhibiting Hnf-4α function, thereby establishing a feedback autoregulatory loop. Our results indicate that loss of Hnf-1α function leads to altered expression of genes involved in glucose-stimulated insulin secretion, insulin synthesis, and β-cell differentiation.