GPR40 is a G protein-coupled receptor expressed preferentially in pancreatic beta cells. It is activated by long-chain fatty acids and has been implicated in mediating physiological and pathological effects of long-chain fatty acids on beta cells. We mapped the GPR40 transcription start site to a location 1044 bp upstream of the translation start site. This permitted definition of the GPR40 core promoter and the organization of the gene, which comprises a 24-bp non-coding exon, a 698-bp intron and a 4402-bp second exon, containing the entire protein coding sequence. Sequence analysis of the GPR40 locus revealed three evolutionarily conserved regions upstream to the translation start site (HR1-HR3). DNase I-hypersensitive sites were present in the HR2 and HR3 regions in beta cells but not in non-beta cells. The 5'-flanking region of the GPR40 gene was capable of directing transcriptional activity selectively in beta cells. An important component of this is attributable to the HR2 region, which showed strong beta cell-specific enhancer activity. Systematic mutagenesis of HR2 revealed several important sub-regions. Mutagenesis of sub-regions 4-5, and 9 reduced transcriptional activity by approximately 60 and 40%, respectively. These sub-regions can bind the beta cell-specific transcription factors PDX1 and BETA2, respectively, both in vitro and in vivo. Thus, cell-specific expression of the GPR40 gene involves a characteristic chromatin organization of the locus and is controlled at the transcriptional level through HR2, a potent beta cell-specific enhancer.