Recent studies with human embryonic stem (hES) cells have established new protocols for substantial generation of pancreatic progenitors from definitive endoderm. These findings add to the efficient derivation of definitive endoderm, which is controlled by Wnt and Nodal pathways, and delineate a step forward in the quest for alternative beta-cell sources. It also indicates that critical refining of the available strategies might help define a universal protocol for pancreatic differentiation applicable to several cell lines, therefore offering the possibility for transplantation of immune-matched or patient-specific hES-derived beta-cells. We appraise here the fundamental role that bone morphogenetic protein, fibroblast growth factor, and retinoid signaling play during pancreas development, and describe a fundamental emergence of their combination in recent studies that generated pancreatic cells from hES cells. We finally enumerate some prospects that might improve further differentiation of the progenitor cells into functional beta-cells needed in diabetes cell therapy.