Islet cell transplantation is one of the most promising therapies for diabetes mellitus (DM). However, the limited availability of purified islets for transplantation and the risk of immunological rejection severely limit its use. In vitro transdifferentiation of autologous bone marrow-derived mesenchymal stem cells (BMSCs) into insulin-producing cells (IPCs) could provide an abundant source of cells for this procedure and avoid immunological rejection. Here, we isolated and characterized BMSCs and induced their in vitro differentiation into IPCs. Reverse-transcription polymerase chain reaction analysis revealed that these IPCs could express Ins1, Ins2, glucagon, glucose transporter 2, and pancreatic duodenal homeobox-1. Insulin production by the IPCs was confirmed by immunocytochemistry and Western blot analysis. On this basis, donor rats supplying BMSCs were made diabetic by a single intraperitoneal injection of streptozotocin. The IPCs were then autologously transplanted into the duodenal submucosa of diabetic rats. Grafted cells could be visualized in sections after 2, 4, and 8 weeks by immunohistochemical staining for insulin. Furthermore, in the IPC-implanted group, hyperglycemia was normalized, compared with a persistent increase in glucose levels in the diabetic group and intraperitoneal glucose tolerance test-induced responses were observed in the IPC-implanted group. These results on autologous transplantation of IPCs derived from BMSCs into the duodenal wall could offer a novel potential therapeutical protocol for DM. Anat Rec, 292:728-735, 2009. V V C 2009 Wiley-Liss, Inc.