Aim The transcription factor hepatocyte nuclear factor-1beta (HNF-1 beta) is expressed in rodent pancreatic progenitor cells, where it is an important member of the genetic hierarchy that regulates the generation of pancreatic endocrine and exocrine cells. The recent description of an HNF-1 beta mutation in a patient with neonatal diabetes suggests that HNF-1 beta may also play a key role in human pancreatic B-cell development. We aimed to investigate the role of HNF-1 beta mutations in neonatal diabetes and also the impact of HNF-1 beta mutations on fetal growth. Methods We sequenced the HNF-1 beta gene in 27 patients with neonatal diabetes in whom other known genetic aetiologies had been excluded. Birth weight was investigated in 21 patients with HNF-1 beta mutations. Results A heterozygous HNF-1 beta mutation, S148L, was identified in one patient with neonatal diabetes diagnosed at 17 days, which rapidly resolved only to relapse at 8 years. This patient had pancreatic atrophy, mild exocrine insufficiency and low birth weight (1.83 kg at 40 weeks' gestation). Intrauterine growth was markedly reduced in patients born to unaffected mothers with a median birth weight of 2.4 kg (range 1.8-3.3) (P = 0.006), median centile weight 3 (0.008-38), and 69% were small for gestational age. Conclusion HNF-1 beta mutations area rare cause of neonatal diabetes as well as pancreatic exocrine and endocrine dysfunction. Low birth weight is a common feature of patients with HNF-1 beta mutations and is consistent with reduced insulin secretion in utero. These findings support a key role for HNF-1 beta in early pancreatic progenitor cells in man.