The mechanism by which the beta-cell transcription factor Pax4 influences cell function/mass was studied in rat and human islets of Langerhans. Pax4 transcripts were detected in adult rat islets, and levels were induced by the mitogens activin A and betacellulin. Wortmannin suppressed betacellulin-induced Pax4 expression, implicating the phosphatidylinositol 3-kinase signaling pathway. Adenoviral overexpression of Pax4 caused a 3.5-fold increase in beta-cell proliferation with a concomitant 1.9-, 4-, and 5-fold increase in Bcl-xL (antiapoptotic), c-myc, and Id2 mRNA levels, respectively. Accordingly, Pax4 transactivated the Bcl-xL and c-myc promoters, whereas its diabetes-linked mutant was less efficient. Bcl-xL activity resulted in altered mitochondrial calcium levels and ATP production, explaining impaired glucose-induced insulin secretion in transduced islets. Infection of human islets with an inducible adenoviral Pax4 construct caused proliferation and protection against cytokine-evoked apoptosis, whereas the mutant was less effective. We propose that Pax4 is implicated in beta-cell plasticity through the activation of c-myc and potentially protected from apoptosis through Bcl-xL gene expression.