Embryonic stem (ES) cells can differentiate into many cell types and are expected to be useful for tissue engineering. Recent reports have shown that ES cells can differentiate into insulin-producing cells in response to the transient expression of the pdx-1 gene, after the removal of feeder cells. To investigate the lineage of insulin-producing cells and their in vitro differentiation, we introduced the betageo gene, encoding a beta-galactosidase-neomycin phosphotransferase fusion protein under the control of the mouse insulin 2 promoter, into ES cells that had been adapted to feeder-free culture, and analyzed insulin gene expression during their in vitro differentiation. We also examined the expression of transcription factors that are related to the differentiation of the pancreas. X-gal staining analysis revealed beta-galactosidase-positive cells on the surface and in the center of the embryoid body that proliferated during differentiation. Glucose-responsive insulin-producing cells, derived from our feeder-free ES cells, expressed insulin 2, pdx-1, Pax4, and Isl1 and also the glucagon, somatostatin, and PP genes. Moreover, the genes encoding p48, amylase, and carboxypeptidase A were also expressed. These results suggest that ES cells can differentiate not only into endocrine cells but also into exocrine cells of the pancreas, without the initiation of pdx-1 expression.