In addition to stimulating insulin secretion, glucagon-like peptide and its long-acting analog exendin 4 have been reported to increase beta-cell mass by both differentiation/neogenesis of precursor cells and enhanced replication of existing beta-cells. Here, we investigated the effect of exendin 4 in the growth and differentiation of beta-cells from undifferentiated precursors in islet-like cell clusters (ICCs) derived from human fetal pancreases. Our results show that the addition of exendin 4 to the culture media stimulates PDX 1 expression in ICCs as shown by immunofluorescence staining. The up-regulation of PDX 1 was not accompanied by changes in insulin expression because we did not find a significant difference in the number of insulin-positive cells in the exendin 4-treated ICCs, compared with controls. We also tested the effects of exendin 4 in the glucose-induced insulin secretion of human ICCs transplanted under the kidney capsule of athymic rats. In the exendin 4-treated rats (given ip during 10 d) 8 wk after the beginning of the treatment, insulin was released in response to glucose as detected by the measurement of circulating human C-peptide. In control (saline-treated) rats, the basal levels of human C-peptide did not change significantly after glucose stimulation. Thus, exendin 4 induces functional maturation of fetal beta-cells in response to glucose. In these rats, serial sections of the kidney-bearing grafts were examined histologically for insulin containing cells. We found a significant increase in beta-cell number, compared with the control rats. Overall, these results show that in vivo exendin 4 causes growth and differentiation of human fetal beta-cells from undifferentiated precursor cells. It also accelerates the functional maturation of fetal beta-cells as evidenced by their glucose-stimulated insulin secretion.