Conophylline and betacellulin-delta4 reproduce differentiation-inducing activity of activin A and betacellulin, respectively. We examined the effect of conophylline and betacellulin-delta4 on beta cell differentiation. In AR42J cells, conophylline and betacellulin-delta4 converted them into insulin-producing cells. Cells treated with conophylline and betacellulin-delta4 continued to grow after differentiation. Thus, cell number and insulin content were much greater compared to cells treated with activin A and betacellulin. Furthermore, cells treated with conophylline and betacellulin-delta4 secreted insulin in response to glucose. Likewise, conophylline and betacellulin-delta4 converted pancreatic ductal cells into insulin-producing cells. Insulin content, cell number and glucose-evoked insulin secretion were significantly greater than those in cells treated with activin A and betacellulin. Transplantation of pseudoislets prepared using ductal cells treated with conophylline and betacellulin-delta4 was able to reduce effectively the plasma glucose concentration in streptozotocin-treated nude mice. Conophylline and betacellulin-delta4 are effective in inducing differentiation of beta cells from progenitors.