The transcription factor hepatocyte nuclear factor (HNF)-1 beta functions as a homodimer or as a heterodimer with the structurally related protein HNF-1 alpha. Both are expressed sequentially in rat kidney development, with HNF-1 beta being detected from the earliest inductory phases. HNF-1 beta gene mutations are associated with a unique disorder characterized by maturity-onset diabetes of the young (MODY) and early-onset and progressive nondiabetic renal dysfunction, which may lead to chronic renal failure.The HNF-1 beta gene was screened for mutations in six subjects with early-onset diabetes and a history of renal dysfunction in the subjects or their families.A novel frameshift mutation in exon 4 of the HNF-1 beta gene and a deletion of CCTCT at codons 328 to 329 were detected in one subject. She was diagnosed as diabetic at the age of 21 in her second pregnancy. Glucose tolerance rapidly deteriorated over 18 months as a result of beta-cell dysfunction. The HNF-1 beta mutation arose de novo on a paternal chromosome and cosegregated with renal abnormalities in her family. The proband had bilateral small cysts in normal-sized kidneys and a reduced creatinine clearance of 66 mL/min (NR 80-120). Her first pregnancy was terminated at 17 weeks following an ultrasound diagnosis of bilateral, nonfunctioning cystic kidneys. Her first-born child had a small multicystic, dysplastic right kidney and a dysplastic left kidney with a reduced creatinine clearance (40 mL/min per 1.73 m2). Histologic examination of the large (5.8 vs. 1.4 g), polycystic fetal kidneys showed no normal nephrogenesis.These studies indicate that HNF-1 beta plays a central role in normal kidney development and pancreatic beta-cell function, and suggest that one mechanism by which HNF-1 beta gene mutations may cause renal dysfunction are by their effects on nephron development.