Diabetes mellitus, which is the result of autoimmune destruction of the insulin-producing cells, occurs by loss of insulin-secreting capacity. The insufficient source of insulin-producing cells (IPCs) is the major obstacle for using transplantation as diabetes treatment method. The present study suggests a method to form islet-like clusters of IPCs derived from mouse embryonic stem cells (mESCs). This protocol consists of several steps. Before starting this protocol, embryoid bodies (EBs) should be cultured in suspension in conditioned medium of isolated mouse pancreatic islet in combination with activing A to be induced. Then differentiated mESCs were replaced with dishes supplemented with basic fibroblast growth factor (bFGF). Next, bFGF was withdrawn, and cyclopamine and noggin were added. Then the cells were treated with B27, nicotinamide, and islet-conditioned medium for maturation. mESCs, as the control group, were cultured without any treatment. An enhanced expression of pancreatic-specific genes was detected by qRT-PCR and immunofluorescence in the differentiated mESCs. The differentiated mESCsco express other markers of pancreatic islet cells as well as insulin. This method exhibited higher insulin generation and further improvement in IPCs protocol that may result in an unlimited source of ES cells suitable for transplantation. The results indicated that conditioned medium, just as critical components of the stem cell niche associated with other factors, had high potential to differentiate mESCs into IPCs.