The paired box and homeodomain containing transcription factors Pax4 and Pax6 are known to be essential for development of the pancreatic endocrine cells. In this report we demonstrate that stable expression of Pax4 in a rat glucagon-producing cell line inhibits the endogenously expressed glucagon gene completely. Furthermore, Pax4 represses Pax6 independent transcription of the insulin promoter, suggesting that Pax4 can actively repress transcription in addition to acting by competition with the transcriptional activator Pax6.