OBJECTIVE: Hundreds of missense mutations in the coding region of PDX1 exist; however, if these mutations predispose to diabetes mellitus is unknown. METHODS: In this study, we screened a large cohort of subjects with increased risk for diabetes and identified two subjects with impaired glucose tolerance carrying common, heterozygous, missense mutations in the PDX1 coding region leading to single amino acid exchanges (P33T, C18R) in its transactivation domain. We generated iPSCs from patients with heterozygous PDX1, PDX1 mutations and engineered isogenic cell lines carrying homozygous PDX1, PDX1 mutations and a heterozygous PDX1 loss-of-function mutation (PDX1). RESULTS: Using an in vitro β-cell differentiation protocol, we demonstrated that both, heterozygous PDX1, PDX1 and homozygous PDX1, PDX1 mutations impair β-cell differentiation and function. Furthermore, PDX1 and PDX1 mutations reduced differentiation efficiency of pancreatic progenitors (PPs), due to downregulation of PDX1-bound genes, including transcription factors MNX1 and PDX1 as well as insulin resistance gene CES1. Additionally, both PDX1 and PDX1 mutations in PPs reduced the expression of PDX1-bound genes including the long-noncoding RNA, MEG3 and the imprinted gene NNAT, both involved in insulin synthesis and secretion. CONCLUSIONS: Our results reveal mechanistic details of how common coding mutations in PDX1 impair human pancreatic endocrine lineage formation and β-cell function and contribute to the predisposition for diabetes.