Adenovirus-mediated gene transfer of pancreatic duodenal homeobox transcription factor PDX-1, especially its super-active version (PDX-1/VP16), induces the expression of pancreatic hormones in murine liver and reverses streptozotocin-induced hyperglycemia. Histological analyses suggest that hepatocytes are the major source of insulin-producing cells by PDX-1 gene transfer, although the conversion of cultured hepatocytes into insulin-producing cells remains to be elucidated. The present study was conducted to address this issue. Hepatocytes were isolated from adult rats. Then, PDX-1 or PDX-1/VP16 gene was introduced by using adenovirus vector. Two days later, the expression of insulin was detected at mRNA and protein levels. Transfection of PDX-1/VP16 was more efficient in converting hepatocytes to insulin-producing cells. Immunoreactivity of albumin was downregulated in transdifferentiated cells and some of them almost completely lost albumin expression. During the course of transdifferentiation, upregulation of mRNA for CK19 and alpha-fetoprotein was observed. When cultured in collagen-1 gel sandwich configuration, hepatocytes maintained their mature phenotype and did not proliferate. In this condition, transfer of PDX-1/VP16 also induced the expression of insulin. These results clearly indicate that hepatocytes possess a potential to transdifferentiate into insulin-producing cells in vitro.