In adult mammals, the production of insulin and other peptide hormones, such as the islet amyloid polypeptide (IAPP), is limited to β-cells due to tissue-specific expression of a set of transcription factors, the best known of which is pancreatic duodenal homeobox protein 1 (Pdx1). Like many homeodomain transcription factors, Pdx1 binds to a core DNA recognition sequence containing the tetranucleotide 5'-TAAT-3'; its consensus recognition element is 5'-CTCTAAT(T/G)AG-3'. Currently, a complete thermodynamic profile of Pdx1 binding to near-consensus and native promoter sequences has not been established, obscuring the mechanism of target site selection by this critical transcription factor. Strikingly, while Pdx1 responsive elements in the human insulin promoter conform to the pentanucleotide 5'-CTAAT-3' sequence, the Pdx1 responsive elements in the human iapp promoter all contain a substitution to 5'-TTAAT-3'. The crystal structure of Pdx1 bound to the consensus nucleotide sequence does not explain how Pdx1 identifies this natural variation, if it does at all. Here we report a combination of isothermal calorimetric titrations, NMR spectroscopy, and extensive multi-microsecond molecular dynamics calculations of Pdx1 that define its interactions with a panel of natural promoter elements and consensus-derived sequences. Our results show a small preference of Pdx1 for a C base 5' relative to the core TAAT promoter element. Molecular mechanics calculations, corroborated by experimental NMR data, lead to a rational explanation for sequence discrimination at this position. Taken together, our results suggest a molecular mechanism for differential Pdx1 affinity to elements from the insulin and iapp promoter sequences.