In this article, we show that glucagon-like peptide 1 (GLP-1) can induce AR42J cells to differentiate into insulin, pancreatic polypeptide, and glucagon-positive cells. In their natural state, these cells, which are derived from a chemically induced pancreatic tumor, possess exocrine and neuroendocrine properties but are negative for islet hormones and their mRNAs. We found that when these cells were exposed to GLP-1 (1 or 10 nmol), a peptide normally released from the gut in response to food and a modulator of insulin release, intracellular cAMP levels were increased, and proliferation of cells was increased for the first 24 h, followed by inhibition. Up to 50% of the cells became positive for islet hormones. The mRNAs for glucose transporter 2 and glucokinase were detected in the GLP-1-treated cells. Insulin was detected by radioimmunoassay (RIA) in the medium of GLP-1-treated cells, and the cells were capable of releasing insulin in a glucose-mediated fashion. Exendin-4, an analog of GLP-1, in some critical experiments performed in a similar manner to GLP-1, with the exception of it being 10-fold more potent. We therefore propose that GLP-1 and exendin-4 are capable of causing pancreatic precursor cells to differentiate into islet cells.