Glucagon-like peptide (GLP) 1 is produced through posttranslational processing of proglucagon and acts as a regulator of various homeostatic events. Among its analogs, however, the function of GLP-1-(1-37), synthesized in small amounts in the pancreas, has been unclear. Here, we find that GLP-1-(1-37) induces insulin production in developing and, to a lesser extent, adult intestinal epithelial cells in vitro and in vivo, a process mediated by up-regulation of the Notch-related gene ngn3 and its downstream targets, which are involved in pancreatic endocrine differentiation. These cells became responsive to glucose challenge in vitro and reverse insulin-dependent diabetes after implantation into diabetic mice. Our findings suggest that efficient induction of insulin production in intestinal epithelial cells by GLP-1-(1-37) could represent a new therapeutic approach to diabetes mellitus.