Although islet transplantation holds promise for the treatment of diabetes, the scarcity of donor tissue remains a major drawback. The aim of this study is to generate insulinproducing cells from adult human pancreatic cells isolated from surgically resected pancreatic tissue. To isolate pancreatic endocrine precursor cells from 57 surgically resected pancreases, the cells were cultured and propagated in conditioned medium after which they were differentiated in Matrigel. The resultant cells were characterized using morphology, immunofluorescent studies, expression of differentiated pancreatic islet-specific genes using quantitative reverse transcription-PCR, and glucose-induced insulin secretion through analysis of C-peptide secretion. The relationships between propagation of insulin-producing cells and clinical variables of the donor were also analyzed. Finally, insulin-producing cell function was examined in streptozotocin-induced diabetic rats. Pancreatic endocrine precursor cells were successfully cultured; insulin-producing cells cultured from soft pancreas parenchyma had a significantly higher success rate. Morphological examination revealed islet-like cluster formation upon transfer to Matrigel. The presence of the neural stem cell marker nestin, duct cell marker cytokeratin 19, and endocrine cell markers C-peptide and pancreatic and duodenal homeobox 1, was also observed. In addition, glucose-stimulated C-peptide release was significantly increased in the insulinproducing cells. Furthermore, in diabetic rats, transplantation of insulin-producing cells reduced hyperglycemia. Isolated pancreatic endocrine precursor cells from surgically resected pancreatic tissue differentiated into insulin-producing cells and showed characteristics of functional endocrine cells. Thus, surgically resected pancreatic tissue may represent an alternative source of functional insulin-producing cells.