Mature beta-cells and nerve cells share many functional similarities despite originating from different embryonic germ layers. The aim of this study was to investigate the potential of neural stem cells (NSCs), isolated from foetal rat brain, as a starting material from which to generate functionally responsive, insulin-containing cells. Our results demonstrated that NSCs can be significantly expanded in vitro and can be induced to express increased preproinsulin mRNA levels. In addition, these NSC-derived cells expressed transcriptional and functional elements associated with a mature beta-cell phenotype. The differentiated cells showed functional responses typical of pancreatic beta-cells, including glucose-dependent increases in metabolism and rapid elevations in intracellular Ca(2+) in response to the sulphonylurea tolbutamide or to increased glucose concentration. These results suggest that NSCs may have potential as a starting material from which to generate beta-cell surrogates for the treatment of patients with Type 1 diabetes mellitus.