The BETA2 transcription factor influences islet beta cell development and function. Activation of insulin gene transcription by this member of the basic helix-loop-helix gene family is mediated by p300 through the ability of this coactivator to form a functional bridge between the basal transcriptional apparatus, BETA2, and PDX-1, another key transcription factor. In this report, we examined whether BETA2-mediated stimulation was also directly influenced by the acetyltransferase activities of p300 or the p300-associated factor. BETA2 was specifically and selectively acetylated by p300-associated factor in beta cells. Sites of BETA2 acetylation were found within the loop region of the basic helix-loop-helix DNA binding/dimerization domain and a more C-terminal region involved in activation. Insulin gene transcription was decreased by blocking acetylation of BETA2 because of effects on DNA binding and activation potential. These findings suggest that acetylation of BETA2 plays a role in controlling the activation state of this islet regulatory factor.