Pancreatic islet cell transplantation is an effective approach to treat type 1 diabetes, however the shortage of cadaveric donors and limitations due to rejection require alternative solutions. Multipotent cells derived from the uterine endometrium have the ability to differentiate into mesodermal and ectodermal cellular lineages, suggesting the existence of mesenchymal stem cells in this tissue. We differentiated human endometrial stromal stem cells (ESSC) into insulin secreting cells using a simple and nontransfection protocol. An in vitro protocol was developed and evaluated by assessing the expression of pan β-cell markers, followed by confirmation of insulin secretion. PAX4, PDX1, GLUT2, and insulin, were all increased in differentiated cells compared to controls. Differentiated cells secreted insulin in a glucose responsive manner. In a murine model, differentiated cells were injected into the kidney capsules of diabetic mice and human insulin identified in serum. Within 5 weeks blood glucose levels were stabilized in animals transplanted with differentiated cells, however those treated with undifferentiated cells developed progressive hyperglycemia. Mice transplanted with control cells lost weight and developed cataracts while those receiving insulin producing cells did not. Endometrium provides an easily accessible, renewable, and immunologically identical source of stem cells with potential therapeutic applications in diabetes.