Since both major forms of diabetes involve inadequate function of pancreatic beta cells, intensive research is ongoing to better understand how beta cells perform their complex role of secreting the hormone insulin in response to physiologic needs. Identification and characterization of pancreatic transcription factors has revealed that they play a crucial role not only in maintenance of mature beta-cell function but also at multiple stages in pancreatic development. Furthermore, recent reports have revealed their potential to convert non-beta cells into insulin-producing cells, which in some cases can function to ameliorate diabetes in experimental animals. The ability to translate these successes to the clinic will require a detailed mechanistic understanding of the molecular basis of action of these proteins. Specific gene regulation in beta cells involves the action of multiple transcription factors recruited to the promoter and functioning synergistically to activate transcription, in part through recruitment of co-activator proteins and components of the basal transcriptional machinery. In addition, the process involves modification of chromatin structure, the details of which are beginning to be elucidated. Our ability to modulate gene expression patterns may lead to developing ways to provide an unlimited supply of functional beta cells for transplantation, permitting a dramatic improvement in therapeutic options for diabetes.