Diabetes is caused by a failure of the pancreas to produce insulin in amounts sufficient to meet the body's needs. A hallmark of diabetes is an absolute (type 1) or relative (type 2) reduction in the mass of pancreatic beta-cells that produce insulin. Mature beta-cells have a lifespan of approximately 48-56 days (rat) and are replaced by the replication of preexisting beta-cells and by the differentiation and proliferation of new beta-cells (neogenesis) derived from the pancreatic ducts. Here, we show that the insulinotropic hormone glucagon-like peptide (GLP)-1, which is produced by the intestine, enhances the pancreatic expression of the homeodomain transcription factor IDX-1 that is critical for pancreas development and the transcriptional regulation of the insulin gene. Concomitantly, GLP-1 administered to diabetic mice stimulates insulin secretion and effectively lowers their blood sugar levels. GLP-1 also enhances beta-cell neogenesis and islet size. Thus, in addition to stimulating insulin secretion, GLP-1 stimulates the expression of the transcription factor IDX-1 while stimulating beta-cell neogenesis and may thereby be an effective treatment for diabetes.