The clinical usability of pancreatic islet transplantation for the treatment of type I diabetes, despite some encouraging results, is currently hampered by the short lifespan of the transplanted tissue. In vivo studies have demonstrated that co-transplantation of Mesenchymal Stem Cells (MSCs) with transplanted pancreatic islets is more effective with respect to pancreatic islets alone in ensuring glycemia control in diabetic rats, but the molecular mechanisms of this action are still unclear. The aim of this study was to elucidate the molecular mechanisms of the positive effect of MSCs on pancreatic islet functionality by setting up direct, indirect and mixed co-cultures. MSCs were both able to prolong the survival of pancreatic islets, and to directly differentiate into an "insulin-releasing" phenotype. Two distinct mechanisms mediated these effects: i) the survival increase was observed in pancreatic islets indirectly co-cultured with MSCs, probably mediated by the trophic factors released by MSCs; ii) MSCs in direct contact with pancreatic islets started to express Pdx1, a pivotal gene of insulin production, and then differentiated into insulin releasing cells. These results demonstrate that MSCs may be useful for potentiating pancreatic islets' functionality and feasibility.