Knowledge of the pathways involved in islet cell differentiation has been exploited to develop new methods for generating beta cells from non-beta cells, such as embryonic stem cells and pancreatic acinar cells, which should lead to the development of future cell therapies for the cure of diabetes. However, these methods do not enable insulin-producing cells to complete their final maturation to fully functional beta cells that are capable of producing high levels of insulin and of responding to normal physiological signals. This obstacle arises from our lack of a complete understanding of how the pancreas is formed and how beta cells differentiate from their precursors during development. Here I review the recent progress in our understanding of the molecular mechanisms controlling beta-cell neogenesis and maturation.