If transplantation of endocrine tissue is to become a therapy for a significant number of insulin-dependent diabetic individuals, tissue sources other than adult human islets will be required. Because human fetal pancreatic cells may offer that alternative, we have tried to find the optimal combination of tissue culture and cryopreservation methods for use in transplantation. Islet-like cell clusters (ICCs), cryopreserved according to reported methods for adult human islets, survived poorly after thawing. In contrast, the yield of ICCs was comparable after collagenase digestion of fresh and cryopreserved pancreatic fragments. However, the ICCs derived from cryopreserved tissue contained a higher proportion of nonepithelial cells, and the recovery of insulin was only 28%, as compared with freshly cultured cells. These ICCs had a lower DNA content and a higher rate of DNA synthesis. Moreover, cryopreserved cells released a higher fraction of their insulin content in basal conditions, and their response to theophylline stimulation was slightly lower. ICCs generated from cryopreserved fragments were able to mature morphologically and functionally in vivo after transplantation into athymic nude mice. However, the level and magnitude of the C-peptide response did not equal that of grafted freshly cultured ICCs. Our results indicate that it is possible to generate ICCs from cryopreserved human fetal pancreas with the capacity, after transplantation, to release insulin appropriately in response to glucose. However, possibly because undifferentiated pancreatic cells may be particularly vulnerable to cry-opreservation, current methods may need to be improved for optimal tissue retrieval.