Introduction: Mesenchymal stem cells (MSCs) derived from bone marrow are multi potent cells that have the capacity to trans-differentiate into a variety of cell types including insulin islet cells. However the efficiency is low. The aim of this study is to explore the potential of Marrow and Umbilical cord vein MSC to differentiate into functional islet like cells in vitro. Materials and Methods: BM-MSCs and UC-MSCs were obtained from healthy donors and were cultured. MSCs with high CD90, CD73, CD105, CD44 and very low CD34 and CD45 expression were differentiated into Islet-like cells, under defined conditions. Insulin and c-peptide positive cells were evaluated with immune-florescence and insulin release after glucose challenge was tested by ELISA. QRT-PCR was done to detect expression of insulin, Glut2, Nkx6.1 and Nkx2.2 at mRNA level. Results:  Our results showed that only BM-MSC can be differentiated to insulin secreting cells. About 15.8%±2.6 and 13.5%±5.5 of cells were positive for insulin and c-peptide, respectively. Our results revealed that expression of Insulin and Glut2 upregulated 20 fold changes at mRNA level. However they were not functional when treated by different concentration of glucose. Conclusion: Our results showed that only Human BM-MSCs, compared to umbilical cord vein MSCs, are able to differentiate into insulin producing cells in vitro.