Although Pdx1-VP16 expression induces hepatic cell transdifferentiation into pancreatic precursor cells (WB-1), these incompletely reprogrammed cells fail to become glucose-sensitive insulin-producing cells in the absence of the activation of late-stage pancreatic transcription factors. As Pax4 promotes late-stage beta-cell differentiation and maturation, we generated lentiviral vector (LV) containing mouse Pax4 gene and developed two hepatic cell lines expressing Pax4 in the absence (WB-2 cells) or presence (WB-1A cells) of Pdx1-VP16, via LV-mediated gene transfer. Functional Pax4 protein expression in WB-2 and WB-1A cells was confirmed by electrophoretic mobility shift assay and Pdx1-VP16 protein expression in WB-1 and WB-1A cells was confirmed by Western blotting. Activation of Pax4 resulted in the expression of the late-stage transcription factors, including Pax6, Isl-1, and MafA, and generated a gene expression profile for WB-1A cells similar to that of functional rat insulinoma INS-1 cells. Insulin abundance in WB-1A cells was demonstrated by immunostaining. WB-1A cells exhibited glucose-responsive insulin release in vitro, and caused a rapid reversal of hyperglycemia following cell transplantation into streptozotocin-induced diabetic mice. Intraperitoneal glucose tolerance test showed a normal glucose response in WB-1, and WB-1A transplanted mice similar to that of normal mice. Removal of transplanted WB-1A cells resulted in a return of hyperglycemia, confirming that they were responsible for the observed normoglycemia. The explanted WB-1A cells exhibited strong insulin staining comparable to native islet beta-cells. These studies indicate that activation of Pax4 in Pdx1-VP16-expressing cells reprograms pancreatic precursor-like WB-1 cells into glucose-responsive, more mature insulin-producing cells.