Phosphatidylinositol 3-kinase (PI3K) has been shown to be an important mediator of intracellular signal transduction in mammalian cells. We show here, for the first time, that the blockade of PI3K activity in human fetal undifferentiated cells induced morphological and functional endocrine differentiation. This was associated with an increase in mRNA levels of insulin, glucagon, and somatostatin, as well as an increase in the insulin protein content and secretion in response to secretagogues. Blockade of PI3K also increased the proportion of pluripotent precursor cells coexpressing multiple hormones and the total number of terminally differentiated cells originating from these precursor cells. We examined whether any of the recently described modulators of endocrine differentiation could participate in regulating PI3K activity in fetal islet cells. The activity of PI3K was inversely correlated with the hepatocyte growth factor/scatter factor-induced downregulation or nicotinamideinduced upregulation of islet-specific gene expression, giving support to the role of PI3K, as a negative regulator of endocrine differentiation. In conclusion, our results provide a mechanism for the regulation of hormone-specific gene expression during human fetal neogenesis. They also suggest a novel function for PI3K, as a negative regulator of cellular differentiation.