The differentiation of pancreatic exocrine AR42J cells into insulin-expressing endocrine cells has served as an important model for both endogenous in vivo beta-cell differentiation as well as potential application to beta-cell engineering of progenitor cells. Exogenous activin, possibly working through intracellular smad 2 and/or smad 3, as well as exogenous exendin-4 (a long-acting glucagon-like peptide-1 agonist) have both been shown to induce insulin-positive/endocrine differentiation in AR42J cells. In this study, we present evidence of significant interplay and interdependence of these two pathways as well as potential synergy between the pathways. In particular, insulin-positive differentiation seems to entail an exendin-4-induced drop in smad 2 and elevation in smad 3 in RNA levels. The latter appears to be dependent on endogenous transforming growth factor (TGF)-beta isoform release by the AR42J cells and may serve as a mechanism to promote beta-cell maturation. The drop in smad 2 may mediate early endocrine commitment. The coapplication of exogenous exendin-4 and, specifically, low-dose exogenous TGF-beta1 led to a dramatic 20-fold increase in insulin mRNA levels, supporting a novel synergistic and codependent relationship between exendin-4 signaling and TGF-beta isoform signaling.