Mutation in HNF1B, the hepatocyte nuclear factor-$1{eta}$ (HNF-$1{eta}$) gene, results in maturity-onset diabetes of the young (MODY) 5, which is characterized by gradual impairment of insulin secretion. However, the functional role of HNF-$1{eta}$ in insulin secretion and glucose metabolism is not fully understood. We identified a family with early-onset diabetes that fulfilled the criteria of MODY. Sanger sequencing revealed that a heterozygous P159L (CCT to CTT in codon 159 in the DNA-binding domain) mutation in HNF1B was segregated according to the affected status. To investigate the functional consequences of this HNF1B mutation, we generated a P159L HNF1B construct. The wild-type and mutant HNF1B constructs were transfected into COS-7 cells in the presence of the promoter sequence of human glucose transporter type 2 (GLUT2). The luciferase reporter assay revealed that P159L HNF1B had decreased transcriptional activity compared to wild-type (p < 0.05). Electrophoretic mobility shift assay showed reduced DNA binding activity of P159L HNF1B. In the MIN6 pancreatic ${eta}$-cell line, overexpression of the P159L mutant was significantly associated with decreased mRNA levels of GLUT2 compared to wild-type (p < 0.05). However, INS expression was not different between the wild-type and mutant HNF1B constructs. These findings suggests that the impaired insulin secretion in this family with the P159L HNF1B mutation may be related to altered GLUT2 expression in ${eta}$-cells rather than decreased insulin gene expression. In conclusion, we have identified a Korean family with an HNF1B mutation and characterized its effect on the pathogenesis of diabetes.