Pax4 is one of the transcription factors that play an important role in the differentiation of islet beta-cells. We scanned the Pax4 gene in 200 unrelated Japanese type 2 diabetic patients and found a missense mutation (R121W) in 6 heterozygous patients and 1 homozygous patient (mutant allele frequency 2.0%). The mutation was not found in 161 nondiabetic subjects. The R121W mutation was located in the paired domain and was thought to affect its transcription activity through lack of DNA binding. Six of seven patients had family history of diabetes or impaired glucose tolerance, and four of seven had transient insulin therapy at the onset. One of them, a homozygous carrier, had relatively early onset diabetes and slowly fell into an insulin-dependent state without an autoimmune-mediated process. This is the first report of a Pax4 gene mutation that exhibits loss of function and seems to be associated with type 2 diabetes. This work provides significant implications for the Pax4 gene as one of the predisposing genes for type 2 diabetes in the Japanese.