Blood glucose homeostasis is achieved by the regulation of insulin and glucagon secretion from the pancreatic islet beta- and alpha-cells. Diabetes mellitus, which comprises a heterogeneous group of hyperglycaemic disorders, results mainly from inadequate mass and function of islet beta-cells. Autoimmune destruction of beta-cells causes type 1 diabetes, while type 2 is characterized by impaired insulin secretion and is often associated with diminished insulin action on its target tissues. Interestingly, similar to type 1 diabetes, a gradual loss of beta-cell mass is observed in type 2 diabetes often requiring insulin therapy. Understanding the molecular mechanism that governs beta-cell mass plasticity may provide a means to develop strategies to countera,ct beta-cell death while increasing replication. Of particular interest is the islet-specific transcription factor paired box4 (Pax4) that was previously shown to be indispensable for the establishment of the beta-cell lineage during development. However, recent accumulating evidence now suggest that Pax4 is also crucial for mature beta-cell expansion and survival in response to physiological cues and that mutations or polymorphisms are associated with both type 1 and type 2 diabetes. In contrast, aberrant expression of Pax4 confers protection against apoptosis to insulinomas, whereas it promotes cell growth in lymphocytes. This review summarizes promising new published results supporting the important function of Pax4 in mature islet beta-cell physiology and its contribution to pathophysiology when deregulated.