Strategy to differentiate stem cells into insulin producing cells (IPCs) in vitro has been a promising one to get cell source of beta-cell replacement therapy for diabetes. It has been suggested that islets and neurons share features and nestin-positive cells could differentiate into IPCs. We have recently developed a three-dimensional culture system using human peripheral blood cells named as blood-born hematosphere (BBHS). Here we showed that most of BBHS were composed of nestin-positive cells. Under the four-stage differentiation protocol for IPCs, we plated nestin-positive BBHS onto fibronectin-coated dish. These cells form islet-like clusters and most of them expressed insulin. Pancreatic specific genes were turned on, such as transcription factors (Pdx-1, Ngn3 and Nkx6.1), genes related to endocrine function (Glut-2 and PC2) or beta cell function (Kir6.2, SUR1). Furthermore islet differentiation was confirmed by dithizone (DTZ) staining to detect zinc ion which binds insulin protein within the cells. Finally, IPCs derived from BBHS showed capability to secrete insulin in response to glucose stimulation. Taken together, our novel protocol successfully induced islet-like human insulin producing cells out of BBHS. This strategy of ex vivo expansion of IPCs using BBHS provides an autologous therapeutic cell source for the treatment of diabetes. (C) 2012 Elsevier Inc. All rights reserved.