We previously characterized human islet-derived precursor cells (hIPCs) as a specific type of mesenchymal stem cell capable of differentiating to insulin (INS)- and glucagon (GCG)-expressing cells. However, during proliferative expansion, INS transcript becomes undetectable and then cannot be induced, a phenomenon consistent with silencing of the INS gene. We explored this possibility by determining whether ectopic expression of transcription factors known to induce transcription of this gene in beta cells, pancreatic and duodenal homeobox factor 1 (Pdx1), V-maf musculoaponeurotic fibrosarcoma oncogene homolog A (Mafa), and neurogenic differentiation 1 (Neurod1), would activate INS gene expression in long-term hIPC cultures. Coexpression of all three transcription factors had little effect on INS mRNA levels but unexpectedly increased GCG mRNA at least 100,000-fold. In contrast to the endogenous promoter, an exogenous rat INS promoter was activated by expression of Pdx1 and Mafa in hIPCs. Chromatin immunoprecipitation (ChIP) assays using antibodies directed at posttranslationally modified histones show that regions of the INS and GCG genes have similar levels of activation-associated modifications but the INS gene has higher levels of repression-associated modifications. Furthermore, the INS gene was found to be less accessible to micrococcal nuclease digestion than the GCG gene. Lastly, ChIP assays show that exogenously expressed Pdx1 and Mafa bind at very low levels to the INS promoter and at 20- to 25-fold higher levels to the GCG promoter in hIPCs. We conclude that the INS gene in hIPCs is modified epigenetically ("silenced") so that it is resistant to activation by transcription factors.