The endocrine pancreas is organized into clusters of cells called islets of Langerhans comprising four well-defined cell types: alpha beta, delta and PP cells. While recent genetic studies indicate that islet development depends on the function of an integrated network of transcription factors, the specific roles of these factors in early cell-type specification and differentiation remain elusive. Nkx2.2 is a member of the mammalian NK2 homeobox transcription factor family that is expressed in the ventral CNS and the pancreas. Within the pancreas, we demonstrate that Nkx2.2 is expressed in alpha, beta and PP cells, but not in delta cells. In addition, we show that mice homozygous for a null mutation of Nkx2.2 develop severe hyperglycemia and die shortly after birth. Immunohistochemical analysis reveals that the mutant embryos lack insulin-producing beta cells and have fewer glucagon-producing alpha cells and PP cells. Remarkably, in the mutants there remains a large population of islet cells that do not produce any of the four endocrine hormones. These cells express some beta cell markers, such as islet amyloid polypeptide and Pdx1, but lack other definitive beta cell markers including glucose transporter 2 and Nkx6.1. We propose that Nkx2.2 is required for the final differentiation of pancreatic beta cells, and in its absence, beta cells are trapped in an incompletely differentiated state.