Although organ-specific stem cells possess plasticity that permit differentiation along new lineages, production of endocrine pancreas and insulin-secreting beta cells from adult nonpancreatic stem cells has not been demonstrated. We present evidence that highly purified adult rat hepatic oval "stem" cells, which are capable of differentiation to hepatocytes and bile duct epithelium, can trans-differentiate into pancreatic endocrine hormone-producing cells when cultured in a high-glucose environment. These differentiated cells can self-assemble to form three-dimensional islet cell-like clusters that express pancreatic islet cell differentiation-related transcripts detectable by reverse transcription-PCR/nested PCR (e.g., PDX-1, PAX-4, PAX-6, Nkx2.2 and Nkx6.1, insulin I, insulin II, glucose transporter 2, and glucagon) and islet-specific hormones detectable by immunocytochemistry (e.g., insulin, glucagon, and pancreatic polypeptide). In addition, these cells concomitantly lose expression of the hepatocyte protein Hep-par. When stimulated with glucose, these cells synthesize and secrete insulin, a response enhanced by nicotinamide. In a pilot study, the oval cell-derived islet cell-like clusters displayed the ability to reverse hyperglycemia in a diabetic NOD-scid mouse. These results indicate that primary adult liver stem cells can differentiate in a nonlineage-restricted manner. Trans-differentiation into endocrine pancreas could have significant implications for future therapies of diabetes.