A major challenge in the treatment of Type I diabetes is the lack of a restorative therapy to replace lost islet mass. Islet or pancreas transplant has proven effective at curing diabetes but its use is severely limited due to donor shortage. An alternative therapy would involve transplantation of a robust, easily accessible cellular population to replace damaged islets and restore insulin secretion. We have isolated a murine pancreatic progenitor cell, using stem cell antigen 1 (Sca-1), a marker of hematopoietic stem cells. These cells are capable of in vitro expansion and differentiation into pancreatic lineage, demonstrate and maintain expression of pancreatic transcription factors, and produce basal amounts of insulin. We theorize that this cell population used, in conjunction with a bioreactor-type culture system that mimics the niche of the pancreas in vivo will generate a viable cell source that has potential for use in the treatment of diabetes