Exogenous insulin administration continues to be the most common means of correcting the absolute insulin deficiency in patients with type 1 diabetes mellitus. Nevertheless, the best available insulin therapy does not control blood glucose levels in a physiological manner, leading to several serious metabolic and neurovascular complications [1]. Beta cell replacement offers an attractive alternative, potentially enabling precise glycaemic control. Clinical islet transplantation, for instance, has proven effective in improving glucose homeostasis, reducing episodes of hypoglycaemia and achieving insulin independence [2]. However, the shortage of donor islet tissues is a major restriction for widespread application of beta cell replacement therapies. The recent developments in stem cell research suggest that human embryonic stem cells (hESCs) hold great promise for fulfilling this need for an unlimited supply of readily available insulin-producing cells. Embryonic stem cells are pluripotent cells derived from the inner cell mass of blastocysts. They exhibit the capacity to develop into the three embryonic germ layers (endoderm, mesoderm and ectoderm). To generate beta cells from hESCs, current approaches have been guided by knowledge of pancreatic development. By recapitulating these developmental signals, several groups have been able to differentiate hESCs into insulinpositive cells [3–6]. Jiang et al. utilised a differentiation protocol omitting serum from the culture medium and reported the presence of islet-like clusters that secreted Cpeptide in response to glucose [3]. However, C-peptidepositive cells only accounted for 2–8% of all cells in the islet-like cluster [3]. When transplanted into chemically induced diabetic mice, the islet-like clusters prolonged survival and secreted C-peptide in response to a glucose challenge [4]. Novocell (now known as ViaCyte, San Diego, CA, USA) developed another differentiation protocol in which hESC-derived insulin positive cells could secrete C-peptide but only in the presence of secretagogues like KCl [5]. When hESC-derived pancreatic progenitors were transplanted into athymic mice, they reported that these cells could also produce human insulin and C-peptide levels comparable to 3,000 human islets [6]. While the results reported by the ViaCyte group were impressive, Matveyenko et al. had difficulty replicating these results in athymic rats [7]. In addition, the recipient mice responded poorly to glucose tolerance testing, which suggests that insulin secretion was not glucose dependent. Clearly, improvements to directed differentiation attempts are necessary to overcome two significant hurdles that G. S. Korbutt : T. Y. Yeung :C. E. Ellis Department of Surgery, Alberta Diabetes Institute, Edmonton, AB, Canada