In this study, an insulinoma-associated antigen-1 (INSM1)-binding site in the proximal promoter sequence of the insulin gene was identified. The co-transfection of INSM1 with rat insulin I/II promoter-driven reporter genes exhibited a 40-50% inhibitory effect on the reporter activity. Mutational experiments were performed by introducing a substitution, GG to AT, into the INSM1 core binding site of the rat insulin I/II promoters. The mutated insulin promoter exhibited a three- to 20-fold increase in the promoter activity over the wild-type promoter in several insulinoma cell lines. Moreover, INSM1 overexpression exhibited no inhibitory effect on the mutated insulin promoter. Chromatin immunoprecipitation assays using beta TC-1, mouse fetal pancreas, and Ad-INSM1-transduced human islets demonstrated that INSM1 occupies the endogenous insulin promoter sequence containing the INSM1-binding site in vivo. The binding of the INSM1 to the insulin promoter could suppress approximately 50% of insulin message in human islets. The mechanism for transcriptional repression of the insulin gene by INSM1 is mediated through the recruitment of cyclin D1 and histone deacetylase-3 to the insulin promoter. Anti-INSM1 or anti-cyclin D1 morpholino treatment of fetal mouse pancreas enhances the insulin promoter activity. These data strongly support the view that INSM1 is a new zinc-finger transcription factor that modulates insulin gene transcription during early pancreas development.