Proliferating pancreatic islet cells obtained by the method of isolating a population of cells that preferably includes predominantly islet precursor cells that express one or more marker associated with an islet precursor cell and providing the precursor cells with one or more a pancreatic differentiation agent so that a population of cells is obtained that has a high proportion of cells with phenotypic characteristics of functional pancreatic islet beta-cells. Optionally, the precursor cells are pretreated by providing them with one or more cell expansion agent to increase the number of cells in the population prior to differentiation. The pancreatic differentiation agent composition comprises a gastrin/CCK receptor ligand, e.g., a gastrin, in an amount sufficient to effect differentiation of pancreatic islet precursor cells to mature insulin-secreting cells. The cell expansion agent composition comprises one or more epidermal growth factor (EGF) receptor ligand in an amount sufficient to stimulate proliferation of the precursor cells. The methods of treatment include transplanting either undifferentiated precursor cells and providing the pancreatic differentiation agent either alone or in combination with the cell expansion agent in situ, or transplanting the functional pancreatic islet beta-cells into the patient. The pancreatic islet beta-cells can be used for drug screening, and replenishing pancreatic function in the context of clinical treatment.