The avian pancreas has three or four lobes and develops from a dorsal and two ventral buds. The cells that will contribute to formation of the dorsal bud are at first located in the mid-dorsal endoderm, those of the ventral buds in the floor of the foregut. The determination of endoderm to form dorsal and ventral bud derivatives occurs before formation of the buds. The highest concentration of endocrine tissue is in the splenic lobe. The lobes contain A and B islets in which glucagon and insulin cells, respectively, predominate. Islets contain somatostatin and pancreatic polypeptide (PP) cells, both of which also occur scattered in the exocrine parenchyma. Pancreatic endocrine cells arise from endoderm: glucagon, insulin, and somatostatin cells differentiate early, PP cells later. To establish culture conditions suitable for avian insulin cells, the epithelial component of dorsal buds of 5-day chick embryos was cultured under various conditions. At the end of 7 days the proportion of insulin cells was determined. In raising the proportion of insulin cells, Matrigel was superior to collagen gel and a serum-free medium (incorporating insulin, transferrin, and selenium) was superior to a serum-containing medium. Modifications to the serum-free medium were tested. Raising the level of glucose or of glucose and essential amino acids increased the proportion of insulin cells. This proportion was also increased by replacement of insulin by insulin-like growth factor-I, whereas addition of transforming growth factor beta1 reduced the proportion. Transfer of explants from poor to favourable culture conditions showed that the improved conditions stimulated quiescent insulin progenitor cells to develop.