Type-1 diabetes is caused by progressive loss of insulin producing beta cells leading to glucose intolerance. Transplantation of allogeneic pancreas and, more recently, islets derived from allogeneic donors can result in reversal of glucose intolerance. However, the number of donor pancreases and/or islets that are available limits such therapy. However, the number of donor pancreases and/or islets that are available limits such therapy. Therefore, new strategies for beta cell replacement are needed. Despite recent advances in identification of mechanisms underlying beta cell development and beta cell function through targeted mutagenesis studies and immunohistochemical observation of the developing pancreas in purine or chicken embryos, our understanding of the mechanisms important for pancreatic islet development is still incomplete. Significant progress has been made in our understanding of the mechanisms important for pancreatic islet development is still incomplete. Significant progress has been made in our understanding of hematopoietic and neuronal stem cells, as well as multipotent embryonic stem (ES) cells and multipotent adult stem cells. However, the quest for identification of islet stem cells has been hampered by the lack of appropriate research tools including antibodies against stage-specific cell surface markers that will allow purification of viable progenitor and stem cells. Based on insights gained in the type of transcription factors responsible for islet differentiation, we will create mice genetically engineered to express fluorescent makers for specific developmental stages (HNF3- pdx1, Ngn3, Nkx6.1) that can be monitored in live cells derived from such mice. Sources for islet stem cells will include the pancreas proper, ES cells and adult tissue specific stem cells, which may be coaxed to acquire an islet fate. These three sources of cells from engineered "rainbow" mice will serve to: (1) identify islet stem cells and progenitor cells based on genetic, cell surface and functional characteristics; (2) study the function of genes known to be involved in endocrine pancreas specification and differentiation, and identify novel genes involved in pancreas development; (3) develop monoclonal antibodies against islet stem, progenitor and precursor cells; (4) develop selection methods to purify islet stem cells from three cell sources; (5) develop culture systems that will induce mature insulin-producing cell differentiation from islet stem ells ex vivo; and (6) demonstrate that islet stem cells from fetal tissue embryonal stem cells or multipotent adult stem cells have the ability to reverse diabetes in vivo. These studies will significantly advance our knowledge on the cell surface phenotype and expressed gene profile of islet stem and progenitor cells as well as the role of known and novel transcription factors in endocrine pancreas commitment and differentiation. They will also provide important cellular, antibody and genetic tools that will aid in the characterization of islet stem and progenitor cells. Finally, we will be in a position to determine whether islet stem cells, to be used for therapy of diabetes, can best be selected from the pancreas proper, from ES cells or from multipotent adult stem cells. These studies should then ultimately culminate in characterization of islet stem cell suitable for clinical therapy of diabetes.