The LIM domain homeobox gene islet 1 (isl-1) is expressed in the embryonic nervous system and may be an early marker of motor neuron specification. isl-1 is expressed in all 4 islet cell types, but a role for isl-1 in the regulation of insulin gene expression has not been demonstrated, and the genetic targets for isl-1 in the pancreas remain unknown. We show here that the proximal rat proglucagon gene promoter binds an amino-terminally truncated Trp-E-isl-1 fusion protein that lacks the LIM domains. The proglucagon gene promoter also binds full-length in vitro translated isl-1 containing the intact LIM domains. isl-1 antisera detects binding of proglucagon gene sequences to isl-1 present in a slowly-migrating complex in nuclear extracts from InR1-G9 islet cells. The transcriptional properties of the proglucagon gene promoter sequences that bind isl-1 (designated Ga, Gb, and Gc) were assessed after transfection of reporter genes into wild type and isl-1-antisense (isl-1(AS)) InR1-G9 islet cells. The proximal proglucagon gene (Ga) promoter sequence reduced TK-CAT activity by approximately 50%, but no change in the activity of the Ga-TK-CAT plasmid was seen after transfection of isl-1(AS) InR1-G9 cells. In contrast, the Gb/Gc sites activated transcription 2-3 fold in wild type InR1-G9 cells, and the isl-1-dependent activation of gene transcription through the Gb/Gc element was eliminated following transfection of isl-1(AS) InR1-G9 cells. These data demonstrate that the LIM domain homeobox gene isl-1 1) is not constrained from DNA binding by its LIM domains and 2) functions as a positive regulator of proglucagon gene transcription in the endocrine pancreas.