Aims/hypothesis Mutations in Isl1, encoding the insulin enhancer-binding protein islet-1 (ISL1), may contribute to attenuated insulin secretion in type 2 diabetes mellitus. We made an Isl1(E283D) mouse model to investigate the disease-causing mechanism of diabetes mellitus. Methods The ISL1(E283D) mutation (c. 849A>T) was identified by whole exome sequencing on an early-onset type 2 diabetes family and then the Isl1(E283D) knockin (KI) mouse model was created and an IPGTT and IPITT were conducted. Glucose-stimulated insulin secretion (GSIS), expression of Ins2 and other ISL1 target genes and interacting proteins were evaluated in isolated pancreas islets. Transcriptional activity of Isl1(E283D) was evaluated by cell-based luciferase reporter assay and electrophoretic mobility shift assay, and the expression levels of Ins2 driven by Isl1 wild-type (Isl1(WT)) and Isl1(E283D) mutation in rat INS-1 cells were determined by RT-PCR and western blotting. Results Impaired GSIS and elevated glucose level were observed in Isl1(E283D) KI mice while expression of Ins2 and other ISL1 target genes Mafa, Pdx1, Slc2a2 and the interacting protein NeuroD1 were downregulated in isolated islets. Transcriptional activity of the Isl1(E283D) mutation for Ins2 was reduced by 59.3%, and resulted in a marked downregulation of Ins2 expression when it was overexpressed in INS-1 cells, while overexpression of Isl1(WT) led to an upregulation of Ins2 expression. Conclusions/interpretation Isl1(E283D) mutation reduces insulin expression and secretion by regulating insulin and other target genes, as well as its interacting proteins such as NeuroD1, leading to the development of glucose intolerance in the KI mice, which recapitulated the human diabetic phenotype. This study identified and highlighted the Isl1(E283D) mutation as a novel causative factor for type 2 diabetes, and suggested that targeting transcription factor ISL1 could offer an innovative avenue for the precise treatment of human type 2 diabetes.