Pancreatic beta-cell-type-specific transcription of the insulin gene is principally regulated by a single cis-acting DNA sequence element, termed the insulin control element (ICE), which is found within the 5'-flanking region of the gene. The ICE activator is a heteromeric complex composed of an islet alpha/beta-cell-specific factor associated with the ubiquitously distributed E2A-encoded proteins (E12, E47, and E2-5). We describe the isolation and characterization of a cDNA for a protein present in alpha and beta cells, termed INSAF for insulin activator factor, which binds to and activates ICE-mediated expression. INSAF was isolated from a human insulinoma cDNA library. Transfection experiments demonstrated that INSAF activates ICE expression in insulin-expressing cells but not in non-insulin-expressing cells. Cotransfection experiments showed that activation by INSAF was inhibited by Id, a negative regulator of basic helix-loop-helix (bHLH) protein function. INSAF was also shown to associate in vitro with the bHLH protein E12. In addition, affinity-purified INSAF antiserum abolished the formation of the activator-specific ICE-binding complex. Immunohistochemical studies indicate that INSAF is restricted in terms of its expression pattern, in that INSAF appears to be detected only within the nuclei of islet pancreatic alpha and beta cells. All of these data are consistent with the proposal that INSAF is either part of the ICE activator or is antigenically related to the specific activator required for insulin gene transcription.