AIMS/HYPOTHESIS: Using a novel directed differentiation protocol, we recently generated up to 25 insulin-producing cells from human embryonic stem cells (hESCs) (insulin(+) cells). At this juncture, it was important to functionally and molecularly characterise these hESC-derived insulin(+) cells and identify key differences and similarities between them and primary beta cells. METHODS: We used a new reporter hESC line with green fluorescent protein (GFP) cDNA targeted to the INS locus by homologous recombination (INS (GFP/w)) and an untargeted hESC line (HES2). INS (GFP/w) allowed efficient identification and purification of GFP-producing (INS:GFP(+)) cells. Insulin(+) cells were examined for key features of adult beta cells using microarray, quantitative PCR, secretion assays, imaging and electrophysiology. RESULTS: Immunofluorescent staining showed complete co-localisation of insulin with GFP; however, cells were often multihormonal, many with granules containing insulin and glucagon. Electrophysiological recordings revealed variable K(ATP) and voltage-gated Ca(2+) channel activity, and reduced glucose-induced cytosolic Ca(2+) uptake. This translated into defective glucose-stimulated insulin secretion but, intriguingly, appropriate glucagon responses. Gene profiling revealed differences in global gene expression between INS:GFP(+) cells and adult human islets; however, INS:GFP(+) cells had remarkably similar expression of endocrine-lineage transcription factors and genes involved in glucose sensing and exocytosis. CONCLUSIONS/INTERPRETATION: INS:GFP(+) cells can be purified from differentiated hESCs, providing a superior source of insulin-producing cells. Genomic analyses revealed that INS:GFP(+) cells collectively resemble immature endocrine cells. However, insulin(+) cells were heterogeneous, a fact that translated into important functional differences within this population. The information gained from this study may now be used to generate new iterations of functioning beta cells that can be purified for transplant.