Humans with heterozygous loss-of-function mutations in the hepatocyte nuclear factor-1alpha (HNF1alpha) gene develop beta-cell-deficient diabetes (maturity-onset diabetes of the young type 3), indicating that HNF1alpha gene dosage is critical in beta-cells. However, whether increased HNF1alpha expression might be beneficial or deleterious for beta-cells is unknown. Furthermore, although it is clear that HNF1alpha is required for beta-cell function, it is not known whether this role is cell autonomous or whether there is a restricted developmental time frame for HNF1alpha to elicit gene activation in beta-cells. To address this, we generated a tetracycline-inducible mouse model that transcribes HNF1alpha selectively in beta-cells in either wild-type or Hnf1alpha-null backgrounds. Short-term induction of HNF1alpha in islets from adult Hnf1alpha(-/-) mice that did not express HNF1alpha throughout development resulted in the activation of target genes, indicating that HNF1alpha has beta-cell-autonomous functions that can be rescued postnatally. However, transgenic induction throughout development, which inevitably resulted in supraphysiological levels of HNF1alpha, strikingly caused a severe reduction of cellular proliferation, increased apoptosis, and consequently beta-cell depletion and diabetes. Thus, HNF1alpha is sensitive to both reduced and excessive concentrations in beta-cells. This finding illustrates the paramount importance of using the correct concentration of a beta-cell transcription factor in both gene therapy and artificial differentiation strategies.