Although the human fetal pancreas early in the second trimester of pregnancy contains functional beta cells, its ability to release insulin in response to glucose is either poor or lacking. It is tissue of this age which usually has been grafted into diabetic humans, in unsuccessful attempts so far, to reverse the hyperglycemic state. One of the explanations for this failure may be the inability of the transplanted fetal tissue to mature. For this reason, it is important to establish a method of maturing the tissue in vitro before grafting. We have cultured explants of human fetal pancreas for a period of three weeks in the presence of an agent known to induce the differentiation of cells, retinoic acid. This substance, at a concentration of 1 microM, was able to induce both a first and second phase insulinogenic response to 20 mM glucose. No increase in insulin release was observed throughout the period of culture; nor was the insulin content of the treated explants different from the controls. Explants exposed to retinoic acid and then grafted into diabetic nude mice were able to normalize the elevated blood glucose levels of these animals after 54-93 days. Oral glucose tolerance tests were normalized and glucose-responsive human C-peptide was measurable in the plasma. Removal of the grafts, which contained 2.92 +/- 0.78 mU/mg insulin resulted in recurrence of hyperglycemia.(ABSTRACT TRUNCATED AT 250 WORDS)