The potential of pluripotent human cells, such as human embryonic stem cells (hESCs) and induced pluripotent stem (iPS) cells, to differentiate into any adult cell type makes them ideally suited for the generation of various somatic cells and tissues in vitro. This remarkable differentiation capacity permits analyzing aspects of human embryonic development in the laboratory, as well as generating specialized adult human cells for screening drugs, and for replacing tissues damaged by injury or degenerative diseases, such as diabetes. Understanding and controlling the fundamental processes that drive the differentiation of specialized cells are the keys to the eventual application of this technology to patients. In this review, we discuss the different protocols developed that are aimed at deriving beta-cells from hESCs. Despite many differences, successful strategies share a general adherence to the normal differentiation pathway through definitive endoderm. Mimicking normal pancreagenesis offers the best strategy for producing glucose-responsive insulin-producing cells in vitro for people with diabetes.