Ex vivo expansion of human fetal pancreatic endocrine cells is important for biological studies and as a potential tissue source for transplantation in insulin-deficient states. In tissue culture experiments involving the use of hepatocyte growth factor/scatter factor and selected extracellular matrices, we obtained a 30-fold increase in cell number of human fetal pancreatic epithelial cells. This proliferation in monolayer culture was associated with marked downregulation of insulin and glucagon gene expression. However, gene expression increased when the cells were combined into three-dimensional aggregates, suggesting that cell-cell contact mediated mechanisms regulate the transcription of islet-specific genes, a process enhanced by nicotinamide (NIC). After transplantation into nude mice, either as cell suspensions or aggregates, only the cell aggregates treated with NIC developed into mature functional islet-like structures. These are the first experiments to describe the interactions of specific matrices and growth factors in the ex vivo expansion of human fetal pancreatic cells, and they also show the importance of cell aggregates in the context of cellular and molecular events that might positively influence islet cell transplantation.