Islet transplantation as a potential treatment for diabetes will always be limited mainly because of the difficulty in obtaining sufficiently large numbers of purified islets from cadaveric donors. One alternative to organ or tissue transplantation is the use of a renewable source of cells. Stem cells are clonogenic cells capable of both self-renewal and multilineage differentiation. Therefore, these cells have the potential to proliferate and differentiate into any type of cell and to be genetically modified in vitro, thus providing cells which can be isolated and used for transplantation. Moreover, these derived cells have proven to be useful in different animal models. In this regard, insulin-secreting cells derived from mouse embryonic stem cells normalize blood glucose when transplanted into streptozotocin-induced diabetic animals. Using a combination of several differentiation methods and a 'cell trapping' system, we have obtained insulin-secreting cells from undifferentiated embryonic stem cells. The construct used allows the expression of a neomycin selection system under the control of the regulatory regions of insulin gene and other beta cell genes, such as Nkx6.1. Transplanted animals correct hyperglycaemia within 1 week and restore body weight in four weeks. Graft removal rescued the diabetic condition. Glucose tolerance test (IPGTT) and blood glucose normalization after a challenge meal was similar in control and in transplanted animals. This approach opens new possibilities for tissue transplantation in the treatment of type 1 and 2 diabetes.