The absence of efficient and directed methods for the differentiation of adult pancreatic progenitor cell populations to pancreatic islet cells has raised doubts concerning the regeneration potential inherent in the adult pancreas. Relatively low levels of islet cell differentiation have been reported using adult pancreatic cells in vivo and in vitro. In the present study, we initially enriched for a nonendocrine epithelial component of the adult human pancreas and defined conditions that are permissive to islet cell differentiation in vitro. Sequential progression of cell differentiation in the permissive conditions allowed for incremental evaluation of changes occurring in the cell population. Optimization of the differentiation process, for the efficient production of islet endocrine cells, was accomplished by identifying specific factors and culture conditions that increased islet progenitor production 250-fold. Ultimately, 85% percent of the nonendocrine epithelial cells isolated from human pancreatic tissue and cultured in the optimized conditions for 8 days, readily re-expressed pancreatic duodenal homeobox-1 (Pdx1). Sixty-five percent of these Pdx1-expressing cells were capable of additional islet endocrine cell differentiation. This represents a significant advancement in the differentiation of an adult pancreatic progenitor cell population in vitro and suggests that the nonendocrine compartment of the human pancreas remains an important cell resource for the generation of transplantable islets to treat diabetes.