Previously, we have demonstrated the ability to generate insulin-producing cells following in vitro manipulation of adult stem cells from rat liver. While these cells clearly produce insulin, many of their cellular properties have yet to be established. These properties include the optimal in vitro condition to generate insulin-producing cells, the kinetics of insulin production in response to glucose stimulation, and the capacity for these cells to reverse overt diabetes in vivo. In this project, we will determine the optimal culture conditions to generate insulin producing cells, to test the hypothesis that oval stem cell-derived insulin producing cells represent functional precursors that require an in vivo environment, potentially one that is hyperglycemic, in order for them to become fully functional (i.e., insulin secreting), hormone-specific beta cells. To test this hypothesis I propose three specific aims. Aim 1: To optimize the in vitro differentiation of hepatic oval stem cells into pancreatic islet-like cells and determine their biological characteristics. Aim 2: Functional characterization of in-vitro-generated islet-like cells using newly developed immunoassay and electrochemical probes. We will evaluate the secretory and metabolic function of hepatic oval cell-derived insulin-producing cells and compare them with normal rat islets by simultaneously monitoring intracellular Ca2+ and insulin secretion from a single islet-like cluster or monolayer cells with high temporal resolution. Aim 3: To determine the ability of oval cell-derived islet-like insulin producing precursor cells to reverse hyperglycemia in a diabetic animal model and define the in vivo glycemic state necessary to support cellular maturation into fully functional, insulin secreting cells. Characterization of the functionality of islet like cells generated from hepatic oval cells represents an important step towards the use of non-pancreatic sources of adult autologous stem cells for cell therapies aimed at curing type 1 diabetes.