Regeneration of β-cells in diabetic patients is an important goal of diabetes research. Islet Neogenesis Associated Protein (INGAP) was discovered in the partially duct-obstructed hamster pancreas. Its bioactive fragment, pentadecapeptide 104-118 (INGAP-P), has been shown to reverse diabetes in animal models and to improve glucose homeostasis in patients with diabetes in clinical trials. Further development of INGAP as a therapy for diabetes requires identification of target cells in the pancreas and characterization of the mechanisms of action. We hypothesized that adult human pancreatic ductal cells retain morphogenetic plasticity and can be induced by INGAP to undergo endocrine differentiation. To test this hypothesis, we treated the normal human pancreatic ductal cell line (HPDE) with either INGAP-P or full-length recombinant protein (rINGAP) for short-term periods. Our data show that this single drug treatment induces both proliferation and transdifferentiation of HPDE cells, the latter being characterized by the rapid sequential activation of endocrine developmental transcription factors Pdx-1, Ngn3, NeuroD, IA-1, and MafA and subsequently the expression of insulin at both the mRNA and the protein levels. After 7 days, C-peptide was detected in the supernatant of INGAP-treated cells, reflecting their ability to secrete insulin. The magnitude of differentiation was enhanced by embedding the cells in Matrigel, which led to islet-like cluster formation. The islet-like clusters cells stained positive for nuclear Pdx-1 and Glut 2 proteins, and were expressing Insulin mRNA. These new data suggest that human adult pancreatic ductal cells retain morphogenetic plasticity and demonstrate that a short exposure to INGAP triggers their differentiation into insulin-expressing cells in vitro. In the context of the urgent search for a regenerative and/or cellular therapy for diabetes, these results make INGAP a promising therapeutic candidate.