Two major initiatives are under way to correct the β-cell deficit of diabetes: one would generate β-cells ex vivo that are suitable for transplantation, and the second would stimulate regeneration of β-cells in the pancreas. Studies of ex vivo expansion suggest that β-cells have a potential for dedifferentiation, expansion, and redifferentiation. Work with mouse and human embryonic stem (ES) cells has not yet produced cells with the phenotype of true β-cells, but there has been recent progress in directing ES cells to endoderm. Putative islet stem/progenitor cells have been identified in mouse pancreas, and formation of new β-cells from duct, acinar and liver cells is an active area of investigation. Peptides, including glucagon-like peptide-1/exendin-4 and the combination of epidermal growth factor and gastrin, can stimulate regeneration of β-cells in vivo. Recent progress in the search for new sources of β-cells has opened promising new opportunities and spawned clinical trials.