HNF1α (Hepatocyte Nuclear Factor 1α) is one of the master regulators in pancreatic beta-cell development and function, and the mutations in Hnf1α are the most common monogenic causes of diabetes mellitus. As a member of the POU transcription factor family, HNF1α exerts its gene regulatory function through various molecular interactions; however, there is a paucity of knowledge in their functional complex formation. In this study, we identified the Groucho protein AES (Amino-terminal Enhancer of Split) as a HNF1α-specific physical binding partner and functional repressor of HNF1α-mediated transcription, which has a direct link to glucose-stimulated insulin secretion in beta-cells that is impaired in the HNF1α mutation-driven diabetes.