#$%^&*AU2010200610B220131003.pdf#####ABSTRACT This disclosure provides a system for producing pancreatic islet cells from embryonic stem cells. Differentiation is initiated towards endoderm cells, and focused using reagents that promote emergence of islet precursors and mature insulin-secreting cells. High quality populations of islet cells can be produced in commercial quantities for use in research, drug screening, or regenerative medicine.