Mutations in GLIS3, which encodes a Krüppel-like zinc finger transcription factor, were found to underlie sporadic neonatal diabetes. Inactivation of Glis3 by gene targeting in mice was previously shown to lead to neonatal diabetes, but the underlying mechanism remains largely unknown. We aimed to elucidate the mechanism of action of GLIS family zinc finger 3 (GLIS3) in Glis3 ( -/- ) mice and to further decipher its action in in-vitro systems.We created Glis3 ( -/- ) mice and monitored the morphological and biochemical phenotype of their pancreatic islets at different stages of embryonic development. We combined these observations with experiments on Glis3 expressed in cultured cells, as well as in in vitro systems in the presence of other reconstituted components.In vivo and in vitro analyses placed Glis3 upstream of Neurog3, the endocrine pancreas lineage-defining transcription factor. We found that GLIS3 binds to specific GLIS3-response elements in the Neurog3 promoter, activating Neurog3 gene transcription both directly, and synergistically with hepatic nuclear factor 6 and forkhead box A2.These results indicate that GLIS3 controls fetal islet differentiation via direct transactivation of Neurog3, a perturbation that causes neonatal diabetes in mice.