In-vitro expansion of insulin-producing cells from adult human pancreatic islets could provide an abundant cell source for diabetes therapy. However, proliferation of β-cell-derived (BCD) cells is associated with loss of phenotype and epithelial-mesenchymal transition (EMT). Nevertheless, BCD cells maintain open chromatin structure at β-cell genes, suggesting that they could be readily redifferentiated. The transforming growth factor β (TGFβ) pathway has been implicated in EMT in a range of cell types. Here we show that human islet cell expansion in vitro involves upregulation of the TGFβ pathway. Blocking TGFβ pathway activation using short hairpin RNA (shRNA) against TGFβ Receptor 1 (TGFBR1, ALK5) transcripts inhibits BCD cell proliferation and dedifferentiation. Treatment of expanded BCD cells with ALK5 shRNA results in their redifferentiation, as judged by expression of β-cell genes and decreased cell proliferation. These effects, which are reproducible in cells from multiple human donors, are mediated, at least in part, by AKT-FOXO1 signaling. ALK5 inhibition synergizes with a soluble factor cocktail to promote BCD cell redifferentiation. The combined treatment may offer a therapeutically applicable way for generating an abundant source of functional insulin-producing cells following ex-vivo expansion.