Insulin secretion is controlled by a complex set of factors. Although blood glucose levels serve as the major stimulus of insulin secretion in mammals, insulin release is also modulated by amino acids, catecholamines, glucagon, and other, intestinal hormones. The identification of factors that modulate insulin production has engendered much interest because of their potential importance in the altered dynamics of insulin secretion in response to glucose characteristic of maturity-onset diabetes mellitus. Decoding of the glucagon gene has uncovered two additional glucagon-like peptides encoded in proglucagon, the polypeptide precursor of glucagon. One of these peptides, glucagon-like peptide I, is processed from proglucagon in two forms, of 31 and 37 amino acids. We report that the smaller of the two glucagon-like peptides potently increases cAMP levels, insulin mRNA transcripts, and insulin release in cultured rat insulinoma cells. These results indicate that glucagon-like peptide I may be a physiologic modulator of insulin gene expression.