Maturity-onset diabetes of the young (MODY) is a monogenic autosomal-dominant form of diabetes mellitus with onset before 25 years of age. Genetic variation in insulin promoter factor-1 (IPF1) (MODY4) is uncommon but may contribute to early- or late-onset diabetes as part of a polygenic background. IPF1 is a homeodomain transcription factor required for pancreas development. Our aim was to identify whether IPF1 gene mutations play a role in Italian early-onset type 2 diabetic (T2D) patients and what functional impact mutations may have in the beta cell. We screened 40 Italian early-onset type 2 diabetic probands for IPF1 mutations, performed oral glucose tolerance tests in the unaffected family members, and performed in vitro functional studies of the mutant variant. In an extended family (Italy-6) of 46 members with clinical phenotypes of gestational diabetes, MODY, and T2D, a single nucleotide change of CCT to ACT was identified at codon 33 resulting in a Pro to Thr substitution (P33T) in the IPF1 transactivation domain that also contributes to an altered metabolic status in the unaffected NM subjects. Of the 22 genotyped Italy-6 members, 9 carried the P33T allele (NM), of whom 5 have either T2D or elevated fasting glucose levels. Oral glucose tolerance tests showed higher glucose levels at 90 minutes in unaffected NM compared with unaffected NN subjects. Of the 5 female pregnant carriers of the IPF1 mutation, 4 had pregnancies complicated by reduced birth weights, miscarriages, or early postnatal deaths. In studies in vitro, the IPF1 mutant protein (P33T) showed a reduction in DNA-binding and transcriptional activation functions as compared to the wild-type IPF1 protein. Our findings suggest that the P33T IPF1 mutation may provide an increased susceptibility to the development of gestational diabetes and MODY4 in the Italy-6 pedigree.