Background: Islet cell transplantation is an emerging therapy in the treatment of diabetes mellitus. Differentiation of islet cells from mesenchymal stem cells (MSCs) is a potential solution to the challenge of insufficient donor sources. This study investigated whether human umbilical cord-derived MSCs could effectively differentiate into insulin-producing cells (IPCs) and evaluated the therapeutic efficacy of IPCs in treating diabetes. Methods: IPCs were induced from MSCs by a two-step protocol. IPC expression products were evaluated by western blot and real-time PCR. IPC insulin secretion was evaluated by ELISA. The viability of IPCs was measured by FDA/PI and dithizone staining. The non-human primate tree shrew was used as a diabetes model. After a single STZ induction into a diabetes model, a single intraportal transplantation of IPCs, MSCs, or normal saline was performed (n = 6 per group). Blood glucose was monitored for 3 weeks, then the animals were euthanized and the distribution of IPCs in the liver was examined pathologically. Results: After about 3 weeks of in vitro induction, IPCs formed microspheres of 100-200 μm, with >95% viable cells that were dithizone stain positive. IPCs expressed islet-related genes and proteins and secreted high levels of insulin whether stimulated by low or high levels of glucose. After transplantation of IPCs into diabetic tree shrews, blood glucose levels decreased rapidly to near normal and were significantly lower than the MSC or saline groups for 3 weeks thereafter. Conclusion: We present the novel discovery that IPCs derived from human umbilical cord MSCs exert a therapeutic effect in a non-human primate model of diabetes. This study provides a preliminary experimental basis for the use of autologous MSC-derived IPCs in the treatment of human diabetes.Keywords: diabetes; human umbilical cord mesenchymal stem cells; insulin-producing cells; non-human primate; transplantation.