In this study, we employ in vitro models to study the factors that can induce mesenchymal-to-epithelial transition (MET) or epithelial-to-mesenchymal transition (EMT) of pancreatic precursor cells and their mechanisms of action with a goal to develop a system that could be used for cell replacement therapy for patients with diabetes mellitus. Development of the endocrine pancreas includes a series of early events wherein precursor cells migrate as mesenchymal cells to form epithelial aggregates that subsequently differentiate into islets of Langerhans. We use primarily cells derived from human cadaveric pancreata, human islet-derived precursor cells (hIPCs) and CD73/CD90/CD105-positive mesenchymal stem cells (+++MSCs), to study MET and EMT. We have established novel cell culture systems of hIPCs and +++MSCs that allows for proliferation of these precursor cells for at least 30 generations. We have shown that the proliferating hIPCs can be induced to transition to epithelial cells that subsequently differentiate into insulin-expressing cells in vitro and in vivo. Moreover, the proliferating state of hIPCs is dependent on the -catenin signaling pathway. When -catenin signaling is down-regulated, hIPCs no longer proliferate. In our studies of transplanting hIPC clusters under the kidney capsules of NOD/SCID mice, we noted that there were mesenchymal-like cells present within the transplants. Since this is important in that it may represent de-differentiation of the endocrine/epithelial cells, we have been studying this phenomenon in vitro. We have found that epithelial cell clusters (ECCs) formed from hIPCs can transition back to cells exhibiting a mesenchymal phenotype. Thus, regulation of MET, an initial step in differentiation toward beta cells, and EMT of ECCs is an important site of control for the use of hIPCs for cell replacement therapy. We have found that platelet-derived growth factor (PDGF) and epidermal growth factor (EGF) regulate hIPC EMT (and proliferation). We are pursuing studies to better understand these processes. Preliminary reports of these findings have been presented at two international meetings.