Precise functioning of the pancreatic β cell is paramount to whole-body glucose homeostasis, and β-cell dysfunction contributes significantly to diabetes mellitus. Using transgenic mouse models, we demonstrate that deletion of the von Hippel-Lindau (Vhlh) gene (encoding an E3 ubiquitin ligase implicated in, among other functions, oxygen sensing in pancreatic β cells) is deleterious to canonical β-cell gene expression. This triggers erroneous expression of factors normally active in progenitor cells, including effectors of the Notch, Wnt, and Hedgehog signaling cascades. Significantly, an up-regulation of the transcription factor Sox9, normally excluded from functional β cells, occurs upon deletion of Vhlh. Sox9 plays important roles during pancreas development but does not have a described role in the adult β cell. β-Cell-specific ectopic expression of Sox9 results in diabetes mellitus from similar perturbations in β-cell identity. These findings reveal that assaults on the β cell that impact the differentiation state of the cell have clear implications toward our understanding of diabetes mellitus.