The conversion of expandable liver progenitor cells into pancreatic beta cells would provide a renewable cell source for diabetes cell therapy. Previously, we reported the establishment of liver epithelial progenitor cells (LEPCs). In this work, LEPCs were modified into EGFP/Pdx-1 LEPCs, cells with stable expression of both Pdx-1 and EGFP. Unlike previous work, with persistent expression of Pdx-1, EGFP/Pdx-1 LEPCs acquired the phenotype of pancreatic endocrine progenitor cells rather than giving rise to insulin-producing cells directly. EGFP/Pdx-1 LEPCs proliferated vigorously and expressed the crucial transcription factors involved in beta cell development, including Ngn3, NeuroD, Nkx2.2, Nkx6.1, Pax4, Pax6, Isl1, MafA and endogenous Pdx-1, but did not secrete insulin. When cultured in high glucose/low serum medium supplemented with cytokines, EGFP/Pdx-1 LEPCs stopped proliferating and gave rise to functional beta cells without any evidence of exocrine or other islet cell lineage differentiation. When transplanted into diabetic SCID mice, EGFP/Pdx-1 LEPCs ameliorated hyperglycemia by secreting insulin in a glucose regulated manner. Considering the limited availability of beta cells, we propose that our experiments will provide a framework for utilizing the immortal liver progenitor cells as a renewable cell source for the generation of functional pancreatic beta cells.