Compositions and methods are provided for generating islet-like cell clusters. The methods include culturing a whole non-islet pancreatic cell discard or cells sorted therefrom with an effective amount of a molecule having Bone Morphogenetic Protein (BMP) activity (e.g., a BMP polypeptide). The effective amount of said molecule having BMP activity (e.g., BMP polypeptide) is sufficient to induce the formation of islet-like cell clusters. The methods further include treating or attenuating insulin-deficiency disorders, including type 1 diabetes. In one non-limiting embodiment, an insulin-deficiency disorder in a subject is treated or attenuated by culturing a whole non-islet pancreatic cell discard or cells sorted therefrom with an effective amount of a molecule having BMP activity (e.g., a BMP polypeptide) such that tho formation of islet-like cell clusters occurs. A therapeutically effective amount of the islet-like cell clusters which produce insulin are then transplanted into a subject in need to treat the insulin-deficiency disorder.
