Human embryonic stem cells (HESCs) are pluripotent cells that may serve as a source of cells for transplantation medicine and as a tool to study human embryogenesis. Using genetic manipulation methodologies, we have investigated the potential of HESCs to differentiate into the various pancreatic cell types. We initially created various HESCs carrying the enhanced green fluorescent protein (eGFP) reporter gene under the control of either the insulin promoter or the pancreatic and duodenal homeobox factor-1 (Pdx1) promoter. Our analysis revealed that during the differentiation of HESCs into embryoid bodies (EBs), we could detect green fluorescent cells when eGFP is regulated by Pdx1 promoter but not by insulin promoter. To examine whether we can induce differentiation into pancreatic cells, we have established human embryonic stem cell lines that constitutively express either Pdx1 or the endodermal transcription factor Foxa2. Following differentiation into EBs, the constitutive expression of Pdx1 enhanced the differentiation of HESCs toward pancreatic endocrine and exocrine cell types. Thus, we have demonstrated expression of several transcription factors that are downstream of Pdx1 and various molecular markers for the different pancreatic cell types. However, the expression of the insulin gene could be demonstrated only when the cells differentiated in vivo into teratomas. We conclude that although overexpression of Pdx1 enhanced expression of pancreatic enriched genes, induction of insulin expression may require additional signals that are only present in vivo.