Adult stem cells have the ability to differentiate into islet like cells for the hope of treating diabetes mellitus (DM). The most important part is the differentiation process from na?ve stem cells to fully differentiated fully functional islet cells. For this purpose, we wanted to optimize the current proposed differentiation media by replacing the FGF with EGF and measure insulin production. Bone marrow-derived MSCs were from mice long bones and expanded in cell culture before induction of differentiation. Stem cells surface markers were analyzed by immunocytochemistry. Cultured stem cells were negative for CD34 while they expressed high levels of CD90. Differentiated cells morphology was studied by using H & E stain. Differentiated cells were detected by studying protein expression of insulin as specific marker for IPC differentiation. Cells function was studied by measuring the insulin production in tissue culture supernatant in vitro and also insulin release in response to glucose challenge. Ditizone staining were both positive. Insulin was secreted by these cells in response to different concentrations of glucose stimulation in a regulated manner. Cells induced with formula contain EGF produced more insulin in the same formula but contain FGF instead, this prove that EGF is the best to use during differentiation process.