Both type I and type II diabetes are characterized by β-cell loss and dysfunction. Therefore, a major goal of diabetes therapy is to promote the formation of new β-cells, either in vitro for transplantation or in vivo, i.e., β-cell regeneration. The question of whether β-cell regeneration occurs by replication of preexisting β-cells or by neogenesis from a precursor within the pancreas is a major focus of interest. Lineage-tracing studies have found evidence only for β-cell replication, while earlier studies based upon the appearance of insulin-positive cells in areas outside of islets formed the basis for the belief that neogenesis from precursors can occur in adult animals. Recently, we found that nonendocrine pancreatic epithelial cells could be induced to undergo endocrine differentiation under the influence of inductive factors from the human fetal pancreas. One possibility is that, similar to models of hepatocyte regeneration, β-cells can arise either by neogenesis or replication, depending on the particular stimulus. Clearly, understanding the nature and control of β-cell regeneration is critical for success in efforts to treat diabetes by β-cell replacement.