Hepatocyte nuclear factors 3 (HNF-3) belong to an evolutionarily conserved family of transcription factors that are critical for diverse biological processes such as development, differentiation, and metabolism. To study the physiological role of HNF-3alpha, we generated mice that lack HNF-3alpha by homologous recombination in embryonic stem cells. Mice homozygous for a null mutation in the HNF-3alpha gene develop a complex phenotype that is characterized by abnormal feeding behavior, progressive starvation, persistent hypoglycemia, hypotriglyceridemia, wasting, and neonatal mortality between days 2 and 14. Hypoglycemia in HNF-3alpha-null mice leads to physiological counter-regulatory responses in glucocorticoid and growth hormone production and an inhibition of insulin secretion but fails to stimulate glucagon secretion. Glucagon-producing pancreatic alpha cells develop normally in HNF-3alpha-/- mice, but proglucagon mRNA levels are reduced 50%. Furthermore, the transcriptional levels of neuropeptide Y are also significantly reduced shortly after birth, implying a direct role of HNF-3alpha in the expression of these genes. In contrast, mRNA levels were increased in HNF-3 target genes phosphofructo-2-kinase/fructose-2,6-bisphophatase, insulin growth factor binding protein-1, and hexokinase I of HNF-3alpha-null mice. Mice lacking one or both HNF-3alpha alleles also show impaired insulin secretion and glucose intolerance after an intraperitoneal glucose challenge, indicating that pancreatic beta-cell function is also compromised. Our results indicate that HNF-3alpha plays a critical role in the regulation of glucose homeostasis and in pancreatic islet function.