Recent advances in pancreatic islet transplantation emphasize the potential of this approach for the long-term control of blood glucose levels in diabetic patients. However, tissue-replacement therapy will become widely available as a treatment for diabetes only when new sources of islets and insulin-producing cells are found. Here, we review recent evidence that documents the potential of mature liver as a source of tissue for generating a functional endocrine pancreas, by ectopic expression of pancreatic transcription and differentiation factors. When key events in the transconversion process have been identified, using the liver as a source of pancreatic tissue might provide a valuable approach for replacing impaired beta cell function in diabetics.