Diabetes mellitus is characterized by insulin deficiency and high plasma glucagon levels, which can be normalized by insulin replacement. It has previously been reported that glucagon gene expression is negatively regulated by insulin at the transcriptional level. By transfection studies, I have now localized a DNA control element that mediates insulin effects on glucagon gene transcription. This element also confers insulin responsiveness to a heterologous promoter. DNA-binding proteins that specifically interact with this insulin-responsive element are found in both glucagon- and non-glucagon-producing cells; and the pattern of binding, as assessed by the gel retardation assay, is not modified by prior insulin treatment.