Formation of new beta cells can take place by two pathways: replication of already differentiated beta cells or neogenesis from putative islet stem cells. Under physiological conditions both processes are most pronounced during the fetal and neonatal development of the pancreas. In adulthood little increase in the beta cell number seems to occur. In pregnancy, however, a marked hyperplasia of the beta cells is observed both in rodents and man. Increased mitotic activity has been seen both in vivo and in vitro in islets exposed to placental lactogen (PL), prolactin (PRL) and growth hormone (GH). Receptors for both GH and PRL are expressed in islet cells and are upregulated during pregnancy. By mutational analysis we have identified different functional domains of the cytoplasmic part of the GH receptor. Thus the mitotic signaling only requires the membrane proximal part of the receptor and activation of the tyrosine kinase JAK2 and the transcription factors STAT1 and 3. The activation of the insulin gene however also requires the distal part of the receptor and activation of calcium uptake and STAT5. In order to identify putative autocrine growth factors or targets for growth factors we have cloned a novel GH/PRL stimulated rat islet gene product, Pref-1 (preadipocyte factor-1). This protein contains six EGF-like motifs and may play a role both in embryonic pancreas differentiation and in beta cell growth and function. In summary, the increasing knowledge about the mechanisms involved in beta cell differentiation and proliferation may lead to new ways of forming beta cells for treatment of diabetes in man.