The present invention relates to the production of islet cells and insulin in a subject by providing for expression of an islet transcription factors in the pancreas of the subject, by for example, introduction of nucleic acid encoding the transcription factor neurogenin3 or a factor that induces neuorgenin3 expression. The present invention also relates to methods for using a islet transcription factor gene and the islet transcription factor polypeptide to alter cellular differentiation in culture or in vivo to produce new -cells to treat patients with diabetes mellitus.