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Transplantation of pancreatic islets can provide long-lasting insulin independence for diabetic patients, but the current islet supply is limited. Here we describe a new in vitro system that utilizes adult human pancreatic islet-enriched fractions to generate hormone-producing cells over 3–4 weeks of culture. By labeling proliferating cells with a retrovirus-expressing green fluorescent protein, we show that in this system hormone-producing cells are generated de novo. These hormone-producing cells aggregate to form islet-like cell clusters. The cell clusters, when tested in vitro, release insulin in response to glucose and other secretagogues. After transplantation into immunodeficient, nondiabetic mice, the islet-like cell clusters survive and release human insulin. We propose that this system will be useful as an experimental tool for investigating mechanisms for generating new islet cells from the postnatal pancreas, and for designing strategies to generate physiologically competent pancreatic islet cells ex vivo. more...