The transplantation of bone marrow (BM) derived cells to initiate pancreatic regeneration is an attractive but as-yet unrealized strategy. Presently, BM derived cells from green fluorescent protein transgenic mice were transplanted into diabetic mice. Repair of diabetic islets was evidenced by reduction of hyperglycemia, increase in number of islets, and altered pancreatic histology. Cells in the pancreata of recipient mice co-expressed BrdU and insulin. Double staining revealed beta cells were in the process of proliferation. BrdU(+) insulin(-) PDX-1(+) cells, Ngn3(+) cells and insulin(+) glucagon(+) cells, which showed stem cells, were also found during beta-cell regeneration. The majority of transplanted cells were mobilized to the islet and ductal regions. In recipient pancreas, transplanted cells simultaneously expressed CD34 but did not express insulin, PDX-1, Ngn3, Nkx2.2, Nkx6.1, Pax4, Pax6, and CD45. It is concluded that BM derived cells especially CD34(+) cells can promote repair of pancreatic islets. Moreover, both proliferation of beta cells and differentiation of pancreatic stem cells contribute to the regeneration of beta cells.