A profound knowledge of the development and differentiation of pancreatic tissues, especially islets of Langerhans, is necessary for developing regenerative therapy for severe diabetes mellitus. A recent developmental study showed that PTF-1a is expressed in almost all parts of pancreatic tissues, in addition to PDX-1, a well-known transcription factor that is essential for pancreas development. Another study suggested that alpha cells and beta cells individually, but not sequentially, differentiated from neurogenin-3--expressing precursor cells. Under strong induction of pancreas regeneration, it is likely that pancreatic duct cells dedifferentiate to grow, express PDX-1, and re-differentiate toward other cell types including islet cells. Duct epithelium-like cells can be cultivated from crude pancreatic exocrine cells and can be induced to differentiate toward islet-like cell clusters under some culture conditions. These cell clusters made from murine pancreas have been shown to control hyperglycemia when transplanted into diabetic mice. Liver-derived oval cells and their putative precursor H-CFU-C have been shown to differentiate toward pancreatic cells. Furthermore, extrapancreatic cells contained in bone marrow and amniotic membrane are reported to become insulin-producing cells. However, their exact characterization and relationship between these cell types remain to be elucidated. Our recent study has shown that islet-like cell clusters can be differentiated from mouse embryonic stem cells. Transplantation of these clusters could ameliorate hyperglycemia of STZ-induced diabetic mice without forming teratomas. Interestingly, these cells expressed several genes specific to exocrine pancreatic tissue in addition to islet-related genes, suggesting that stable and efficient differentiation toward certain tissues can only be achieved through a process mimicking normal development of the tissue. Perhaps recent developments in these fields may rapidly lead to an established regenerative therapy for diabetes mellitus.