An attractive approach to replace the destroyed insulin-producing cells (IPCs) is the generation of functional β cells from stem cells. Embryonal carcinoma (EC) stem cells are pluripotent cells which can differentiate into all cell types. The present study was carried out to establish a simple nonselective inductive culture system for generation of IPCs from P19 EC cells by 1-2 weeks old mouse pancreas extract (MPE). Since, mouse pancreatic islets undergo further remodeling and maturation for 2-3 weeks after birth, we hypothesized that the mouse neonatal MPE contains essential factors to induce in vitro differentiation of pancreatic lineages. Pluripotency of P19 cells were first confirmed by expression analysis of stem cell markers, Oct3/4, Sox-2 and Nanog. In order to induce differentiation, the cells were cultured in a medium supplemented by different concentrations of MPE (50, 100, 200 and 300 µg/ml). The results showed that P19 cells could differentiate into IPCs and form dithizone-positive cell clusters. The generated P19-derived IPCs were immunoreactive to proinsulin, insulin and insulin receptor beta. The expression of pancreatic β cell genes including, PDX-1, INS1 and INS2 were also confirmed. The peak response at the 100 µg/ml MPE used for investigation of EP300 and CREB1 gene expression. When stimulated with glucose, these cells synthesized and secreted insulin. Network analysis of the key transcription factors (PDX-1, EP300, CREB1) during the generation of IPCs resulted in introduction of novel regulatory candidates such as MIR17, and VEZF1 transcription factors, as well as MORN1, DKFZp761P0212, and WAC proteins. Altogether, we demonstrated the possibility of generating IPCs from undifferentiated EC cells, with the characteristics of pancreatic β cells. The derivation of pancreatic cells from EC cells which are ES cell siblings would provide a valuable experimental tool in study of pancreatic development and function as well as rapid production of IPCs for transplantation.