Reduction of the beta cell mass is critical in the pathogenesis of diabetes mellitus. The discovery of agents, which induce differentiation of pancreatic progenitors to beta cells, would be useful to develop a new therapeutic approach to treat diabetes. To identify a new agent to stimulate differentiation of pancreatic progenitor cells to beta cells, we screened various compounds using pancreatic AR42J cells, a model of pancreatic progenitor cells. Among various compounds and extracts tested, we found that conophylline, a vinca alkaloid extracted from leaves of a tropical plant Ervatamia microphylla, was effective in converting AR42J into endocrine cells. Conophylline reproduces the differentiation-inducing activity of activin A. Unlike activin A, however, conophylline does not induce apoptosis. To induce differentiation of AR42J cells, conophylline increases the expression of neurogenin-3 by activating p38 mitogen-activated protein kinase. Conophylline also induces differentiation in cultured pancreatic progenitor cells obtained from fetal and neonatal rats. More importantly, conophylline is effective in reversing hyperglycemia in neonatal streptozotocin-treated rats, and both the insulin content and the beta cell mass are increased by conophylline. Histologically, conophylline increases the numbers of ductal cells positive for pancreatic-duodenal-homeobox protein-1 and islet-like cell clusters. Conophylline and related compounds are useful in inducing differentiation of pancreatic beta cells both in vivo and in vitro.