Extracellular factors that regulate the growth and differentiation of cell lineages in the pancreatic primordia are poorly understood. Identification of these factors for pancreatic islet beta-cells could open new avenues for the treatment of insulin-dependent diabetes. We developed a low cell density serum-free culture system for dissociated pancreatic cells from the 13.5-day mouse fetus and investigated the effects of extracellular matrix proteins on differentiation of islet cells. After 4 days in culture, total cell number decreased by two-thirds, but insulin-positive beta-cell number increased 10-fold. Both of collagens I and IV inhibited cell survival(by >50%), whereas fibronectin had no effect. In the presence of soluble laminin-l, however, the number of beta-cells increased Linearly by 60-fold without an increase in the total cell number; glucagon-positive cell number was unchanged, and somatostatin and pancreatic polypeptide-positive cells were not detected. The effect of laminin-l was completely blocked by a monoclonal rat anti-laminin-l antibody. In the presence of laminin-l, the thymidine analogue, BrdU, was incorporated into only 2.5% of cells, which were mainly insulin-negative at days 1-3. Laminin-l appeared, therefore, to induce differentiation of beta-cells from precursor cells in day-13.5 fetal pancreas. Laminin-l was shown to be expressed in the epithelial basement membrane of the 13.5- to 17.5-day fetal pancreas. These findings provide the first evidence of a role for laminin-l to promote differentiation of pancreatic beta-cells.