It was recently reported that pluripotent mesenchymal stem cells (MSCs) in rodent bone marrow (BM) have the capacity to generate insulin-producing cells (IPCs) in vitro. However, little is known about this capacity in human BM-MSCs. We developed a nongenetic method to induce human BM-MSCs to transdifferentiate into IPCs both phenotypically and functionally. BM-MSCs from 12 human donors were sequentially cultured in specially defined conditions. Their differentiation extent toward β-cell phenotype was evaluated systemically. Specifically, after induction human BM-MSCs formed spheroid islet-like clusters containing IPCs, which was further confirmed by dithizone (DTZ) staining and electron microscopy. These IPCs expressed multiple genes related to the development or function of pancreatic β cells (including NKX6.1, ISL-1, Beta2/Neurod, Glut2, Pax6, nestin, PDX-1, ngn3, insulin and glucagon). The coexpression of insulin and c-peptide was observed in IPCs by immunofluorescence. Moreover, they were able to release insulin in a glucose-dependent manner and ameliorate the diabetic conditions of streptozotocin (STZ)-treated nude mice. These results indicate that human BM-MSCs might be an available candidate to overcome limitations of islet transplantation.