This study aimed to identify the suitable induction protocol to produce highly qualified insulin producing cells (IPCs) from human adipose tissue derived stem cells (ADSCs) and evaluate the efficacy of the most functionally IPCs in management of diabetes mellitus (DM) in rats. The ADSCs were isolated and characterized according to the standard guidelines. ADSCs were further induced to be IPCs in vitro using three different protocols. The success of trans-differentiation was assessed in vitro through analysis of pancreatic endocrine genes expression, and insulin release in response to glucose stimulation. Then, the functionalization of the generated IPCs was evaluated in vivo. The in vitro findings revealed that the laminin-coated plates in combination with insulin-transferrin-selenium, B27, N2, and nicotinamide could efficiently up-regulate the expression of pancreatic endocrine genes. The in vivo study indicated effectual homing of the PKH-26-labelled IPCs in the pancreas of treated animals. Moreover, IPCs infusion in diabetic rats induced significant improvement in the metabolic parameters and prompted considerable up-regulation in the expression of the pancreatic related genes. The regenerative effect of infused IPCs was determined through histological examination of pancreatic tissue. Conclusively, the utilization of laminin–coated plates in concomitant with extrinsic factors promoting proliferation and differentiation of ADSCs could efficiently generate functional IPCs.