Objective: Many previous studies reported that neonatal pig pancreatic cell clusters (NPCCs) transdifferentiate into insulin positive cells at least 8 weeks after transplantation under the renal capsule of mice. Interestingly, these studies described that transdifferentiation was proceeded without gene transfection or chemicals. In this study, we observed that transdifferentiation of NPCC into insulin positive cell is reproducible after encapsulation with alginate within 16 weeks. Methods: To compare the cellular characteristics of neonatal pigs depending on age, NPCCs were isolated from 3-day, 7-day, 14-day pigs each. Isolated NPCCs were cultured for 7days and stained for Insulin/ panCK. NPCCs of 3-day pig were encapsulated with alginate. In vitro test, non-encapsulated (naked) or encapsulated NPCCs were tested that mRNA typing, glucose stimulated insulin secretion and immunohistochemistry staining for insulin/Cytokeratin. In vivo test, encapsulated 4000 IEQs were transplanted into the intraperitoneal cavity of Balb/c nude mice. And, naked NPCCs were transplanted under the renal capsule. Transplanted naked and encapsulated NPCCs were harvested at 8 weeks and 16 weeks, and they were fixed in formaldehyde for immunohistochemical staining. Results: We observed that the rate of increase of insulin positive cells was not significantly different in 3-day, 7-day, 14-day pigs, so we used 3-day pigs. Insulin positive cells were shown to time-dependent increase after transplantation and in vitro test. Also, the ratio of insulin-positive cells was similar in both groups, naked and encapsulated NPCCs. And, Insulin secretion increased depending on time in naked and encapsulated NPCCs. Other results are currently being measured and verified. Conclusion: Although a mechanism in which NPCCs transdifferentiate into insulin-positive cells remains unknown, we demonstrated that NPCCs transdifferentiate within the alginate capsules. Further studies are needed to increase the rate of transdifferentiation. it maybe a good source for xenotransplantation. Also, it may help to decrease time to return to normoglycemia and save the cost in NPCCs isolation.