Paired box 4 (Pax4) is a key transcription factor involved in the embryonic development of the pancreatic islets of Langerhans. Consisting of a conserved paired box domain and a homeodomain, this transcription factor plays an essential role in early endocrine progenitor cells, where it is necessary for cell-fate commitment towards the insulin-secreting β cell lineage. Knockout of Pax4 in animal models leads to the absence of β cells, which is accompanied by a significant increase in glucagon-producing α cells, and typically results in lethality within days after birth. Mutations in Pax4 that cause an impaired Pax4 function are associated with diabetes pathogenesis in humans. In adulthood, Pax4 expression is limited to a distinct subset of β cells that possess the ability to proliferate in response to heightened metabolic needs. Upregulation of Pax4 expression is known to promote β cell survival and proliferation. Additionally, ectopic expression of Pax4 in pancreatic islet α cells or δ cells has been found to generate functional β-like cells that can improve blood glucose regulation in experimental diabetes models. Therefore, Pax4 represents a promising therapeutic target for the protection and regeneration of β cells in the treatment of diabetes. The purpose of this review is to provide a thorough and up-to-date overview of the role of Pax4 in pancreatic β cells and its potential as a therapeutic target for diabetes.