Embryonic stem cells (ESCs) have the capacity to generate a panoply of tissue types and may therefore provide an alternative source of tissue in regenerative medicine to treat potentially debilitating conditions like Type 1 diabetes mellitus. However, the ability of mouse ESCs to generate insulin-producing cell clusters (IPCCs) remains highly contentious. In an attempt to clarify this issue, three protocols for the ESC-based generation of IPCCs (referred to as Blyszczuk, Hori, and Lumelsky protocols) were modified and evaluated for their ability to express pancreatic islet genes and proteins and their capacity to function. Herein, we show that the Blyszczuk protocol reproducibly generated IPCCs with gene-expression characteristics that were qualitatively and quantitatively most reminiscent of those found in pancreatic islets. Furthermore, compared to the Hori and Lumelsky protocols, Blyszczuk-derived IPCCs exhibited superior expression of c-peptide, a by-product of de novo insulin synthesis. Functionally, Blyszczuk IPCCs, in contrast to Hori and Lumelsky IPCCs, were able to transiently restore normal blood glucose levels in diabetic mice (<1 week). Longer normoglycemic rescue (>2 weeks) was also achieved in a third of diabetic recipients receiving Blyszczuk IPCCs. Yet Blyszczuk IPCCs were less able to rescue experimental diabetes than isolated syngeneic pancreatic islet tissue. Therefore, depending on the mode of differentiation, ESCs can be driven to generate de novo IPCCs that possess limited functionality. Further modifications to differentiation protocols will be essential to improve the generation of functional IPCCs from mouse ESCs.