Rat pancreatic AR42J cells possess exocrine and neuroendocrine properties. Activin A induces morphological changes and converts them into neuron-like cells. In activin-treated cells, mRNA for pancreatic polypeptide (PP) but not that for either insulin or glucagon was detected by reverse transcription-PCR. About 25% of the cells were stained by anti-PP antibody. When AR42J cells were incubated with betacellulin, a small portion of the cells were stained positively with antiinsulin and anti-PP antibodies. The effect of betacellulin was dose dependent, being maximal at 2 nM. Approximately 4% of the cells became insulin positive at this concentration, and mRNAs for insulin and PP were detected. When AR42J cells were incubated with a combination of betacellulin and activin A, approximately 10% of the cells became insulin positive. Morphologically, the insulin-positive cells were composed of two types of cells: neuron-like and round-shaped cells. Immunoreactive PP was found in the latter type of cells. The mRNAs for insulin, PP, glucose transporter 2, and glucokinase, but not glucagon, were detected. Depolarizing concentration of potassium, tolbutamide, carbachol, and glucagon-like peptide-1 stimulated the release of immunoreactive insulin. These results indicate that betacellulin and activin A convert amylase-secreting AR42J cells into cells secreting insulin. AR42J cells provide a model system to study the formation of pancreatic endocrine cells.