Aims/hypothesis: Loss of pancreatic beta cells is the crucial event in the development of type 1 diabetes. It is the result of an imbalance between autoimmune destruction and insufficient regeneration of islet cells. To study the role of islet cell regeneration in the pathogenesis of type 1 diabetes, we focused on PAX4, a paired homeodomain transcriptional repressor that is involved in islet cell growth. Methods: The study included 379 diabetic children and 1,070 controls from two distinct populations, and a cohort of children who had not developed type 1 diabetes, despite the presence of islet cell antibodies. Genomic DNA analysis of PAX4 was carried out via direct sequencing of PCR-amplified fragments and allelic discrimination. We compared the transrepression potential of the PAX4 variants in βTC3 cells and analysed their influence on beta cell growth. Results: The type 1 diabetic subjects are different from the normal individuals in terms of the genotype distribution of the A1168C single nucleotide polymorphism in PAX4. The C/C genotype is frequent among type 1 diabetic children (73%) and rare among the control population (32%). Conversely, the A/C genotype is prevalent among control subjects (62%) and antibody-positive children without type 1 diabetes (73.6%), but uncommon among subjects with type 1 diabetes (17.5%). The combination of PAX4A and PAX4C is functionally more active than PAX4C alone (the ‘diabetic' variant). Beta cells expressing PAX4A and PAX4C efficiently proliferate when stimulated with glucose, whereas cells expressing the PAX4C variant alone do not. Conclusions/interpretation: We have identified a link between beta cell regenerative capacity and susceptibility to type 1 diabetes. This finding could explain the fact that not all of the individuals who develop autoimmunity against beta cells actually contract the disease. The C/C genotype of the A1168C polymorphism in PAX4 can be viewed as a predisposition marker that can help to detect individuals prone to develop type 1 diabete