Estrogen receptors (ERs) protect pancreatic islet survival in mice through rapid extranuclear actions. ERalpha also enhances insulin synthesis in cultured islets. Whether ERalpha stimulates insulin synthesis in vivo and, if so, through which mechanism(s) remain largely unknown. To address these issues, we generated a pancreas-specific ERalpha knockout mouse (PERalpha KO(-/-)) using the Cre-loxP strategy and used a combination of genetic and pharmacologic tools in cultured islets and beta cells. Whereas 17beta-estradiol (E2) treatment up-regulates pancreatic insulin gene and protein content in control ERalpha lox/lox mice, these E2 effects are abolished in PERalpha KO(-/-) mice. We find that E2-activated ERalpha increases insulin synthesis by enhancing glucose stimulation of the insulin promoter activity. Using a knock-in mouse with a mutated ERalpha eliminating binding to the estrogen response elements (EREs), we show that E2 stimulation of insulin synthesis is independent of the ERE. We find that the extranuclear ERalpha interacts with the tyrosine kinase Src, which activates extracellular signal-regulated kinases(1/2), to increase nuclear localization and binding to the insulin promoter of the transcription factor NeuroD1. This study supports the importance of ERalpha in beta cells as a regulator of insulin synthesis in vivo.