Pancreatic duodenum homeobox protein-1 (PDX1) is a master regulatory gene in pancreatic development. Reprogramming of mesenchymal stem cells (MSCs) is a promising tool for producing insulin-producing cells. In this study, lentivirus harboring PDX1 (LV-PDX1) has been used for persistence gene expression in MSCs. The objective of this study was to evaluate the potential of lentivirus to introduce the PDX1 gene into MSCs to produce insulin-secreting cells and apply it for treatment of hyperglycemia in diabetic rats. MSCs were isolated from rat bone marrow, characterized, and transduced by LV-PDX1. Significant expressions of PDX1, neurogenin3, glucagon, glucose transporter2 (Glut2), and insulin were detected by quantitative reverse transcription-polymerase chain reaction (P < 0.05). PDX1 and insulin were detected at the protein level by immunofluorescence analysis. PDX1 could trigger a gene expression cascade that involved pancreatic endocrine differentiation and also revealed the glucose sensing ability by expressing Glut2 in high-glucose medium. The insulin secretion of MSCsPDX1+ in the high-glucose medium was 1.75-fold higher than that secreted in the low-glucose medium (P < 0.05). MSCsPDX1+ implanted into diabetic rats could decrease the blood glucose level from 485 mg/dL to the normal level in 3 days. This study showed MSCsPDX1+ have the potential to be used as a viable resource in cell-based gene therapy of type 1 diabetes.