Several recent reports claim the generation of insulin-producing cells from embryonic stem cells via the differentiation of progenitors that express nestin. Here, we investigate further the properties of these insulin-containing cells. We find that although differentiated cells contain immunoreactive insulin, they do not contain proinsulin-derived C-peptide. Furthermore, we find variable insulin release from these cells upon glucose addition, but C-peptide release is never detected. In addition, many of the insulin-immunoreactive cells are undergoing apoptosis or necrosis. We further show that cells cultured in the presence of a phosphoinositide 3-kinase inhibitor, which previously was reported to facilitate the differentiation of insulin(+) cells, are not C-peptide immunoreactive but take up fluorescein isothiocyanate-labeled insulin from the culture medium. Together, these data suggest that nestin(+) progenitor cells give rise to a population of cells that contain insulin, not as a result of biosynthesis but from the uptake of exogenous insulin. We conclude that C-peptide biosynthesis and secretion should be demonstrated to claim insulin production from embryonic stem cell progeny.