The absence of Pdx1 and the expression of brain-4 distinguish alpha-cells from other pancreatic endocrine cell lineages. To define the transcription factor responsible for pancreatic cell differentiation, we employed the reverse tetracycline-dependent transactivator system in INS-I cell-derived subclones INSralphabeta and INSrbeta to achieve tightly controlled and conditional expression of wild type Pdx1 or its dominant-negative mutant, as well as brain-4. INSralphabeta cells express not only insulin but also glucagon and brain-4, while INSrbeta cells express only insulin. Overexpression of Pdx1 eliminated glucagon mRNA and protein in INSralphabeta cells and promoted the expression of beta-cell-specific genes in INSrbeta cells. Induction of dominant-negative Pdx1 in INSralphabeta cells resulted in differentiation of insulin-producing beta-cells into glucagon-containing alpha-cells without altering brain4 expression. Loss of Pdx1 function alone in INSrbeta cells, which do not express endogenous brain-4 and glucagon, was also sufficient to abolish the expression of genes restricted to beta-cells and to cause alpha-cell differentiation. In contrast, induction of brain-4 in INSrbeta cells initiated detectable expression of glucagon but did not affect beta-cell-specific gene expression. In conclusion, Pdx1 confers the expression of pancreatic beta-cell-specific genes, such as genes encoding insulin, islet amyloid polypeptide, Glut2, and Nkx6.1. Pdx1 defines pancreatic cell lineage differentiation. Loss of Pdx1 function rather than expression of brain4 is a prerequisite for alpha-cell differentiation.