The major obstacle in using pancreatic islet transplantation to cure type I and some type II diabetes is the shortage of the donors. One of ways to overcome such obstacle is to isolate and clone pancreatic stem cells as "seed cells" and induce their differentiation into functional islets as an abundant transplantation source. In this study, a monoclonal human pancreatic stem cell (mhPSC) line was obtained from abortive fetal pancreatic tissues. Pancreatic tissues were taken from abortive fetus by sterile procedures, and digested into single cells and cell clusters with 0.1% type IV collagenase. Cultured in modified glucose-low DMEM with 10% fetal bovine serum (FBS), these single cells and cell clusters adhered to culture dishes, and then primary epidermal-like pancreatic stem cells started to clone. After digesting with 0.25% trypsin and 0.04% EDTA, fibroblasts and other cells were gradually eliminated and epithelioid pancreatic stem cells were gradually purified during generations. Using clone-ring selection, the mhPSCs were obtained. After addition of 10 ng/mL epidermal growth factor (EGF) in cell culture medium, the mhPSCs quickly grew and formed a gravelstone-like monolayer. Continuously proliferated, a mhPSC line, which was derived from a male abortive fetus of 4 months old, has been passed through 50 generations. More than 1×10 9 mhPSCs were cryo-preserved in liquid nitrogen. Karyotype analysis showed that the chromosome set of the mhPSC line was normal diploid. Immunocytochemistry results demonstrated that the mhPSC line was positive for the pdx1, glucagon, nestin and CK19, and negative for the insulin, CD34, CD44 and CD45 protein expression. RT-PCR revealed further that the mhPSCs expressed transcription factors of the pdx1, glucagon, nestin and CK19. Also, in vitro induced with β-mercaptoethanol, the mhPSCs differentiated into nerve cells that expressed the NF protein. Induced with nicotinamide, the mhPSCs differentiated into functional islet-like clusters, as identified by dithizone staining, which expressed the transcription factor of the insulin and secreted the insulin and C-peptide. Furthermore, the transplantation of mhPSCs-induced pancreatic islets into the subcapsular region of the kidney in streptozotocin-induced diabetic rats could reduce blood glucose levels and prolong the life time.