The differentiation of pancreatic ductal epithelial cells into beta-cells has been considered as an alternative method for increasing the number of islets for transplantation. Critical factors have been introduced into the in vitro differentiation protocol for pancreatic duct cells in order to enhance the production of beta-cells. Islet neogenesis-associated protein (INGAP) is an initiator of islet neogenesis and the peptide sequence 104-118 of INGAP has been shown to stimulate an increase in beta-cell mass in animals and also found in human pathological states involving islet neogenesis. To establish a novel method for the differentiation of beta-cells from human pancreatic duct cells with INGAP-related pentadecapeptide (INGAP-PP), the pancreatic duct cells were isolated, purified and expanded in vitro and differentiated using a four-step protocol that included nicotinamide, exendin-4, transforming growth factor beta(1) and INGAP-PP/Scrambled peptide (Scrambled-P). The production of islet-like clusters (ILCs) in the INGAP-PP group was significantly higher than that in the Scrambled-P control group after differentiation from an equal number of duct cells. The duct cells showed positive staining and expression for cytokeratin 19, pancreatic duodenal homeobox-1, nestin, and were negative for insulin and glucagon, as detected by both immunofluorescence and RT-PCR. Following differentiation the cells became insulin and glucagon positive. In addition, the ILCs from the INGAP-PP group secreted higher levels of insulin and C-peptide than the Scrambled-P group under a high glucose challenge. We conclude that INGAP peptide enhances the in vitro differentiation of pancreatic duct cells into islet-like clusters.