Identifying molecular mechanisms that regulate insulin expression in bone marrow-derived mesenchymal stem cells (bmMSCs) can provide clues on how to stimulate the differentiation of bmMSCs into insulin-producing cells (IPCs), which can be used as a therapeutic approach against type 1 diabetes (T1D). As repression factors may inhibit differentiation, the efficiency of this process is insufficient for cell transplantation. In this study, we used the mouse insulin 2 (Ins2) promoter sequence and performed a DNA affinity precipitation assay combined with liquid chromatography-mass spectrometry to identify the transcription factor, chicken ovalbumin upstream promoter transcriptional factor I (COUP-TFI). Functionally, bmMSCs were reprogrammed into IPCs via COUP-TFI suppression and MafA overexpression. The differentiated cells expressed higher levels of genes specific for islet endocrine cells, and they released C-peptide and insulin in response to glucose stimulation. Transplantation of IPCs into streptozotocin-induced diabetic mice caused a reduction in hyperglycemia. Mechanistically, COUP-TFI bound to the DR1 (direct repeats with 1 spacer) element in the Ins2 promoter, thereby negatively regulating promoter activity. Taken together, the data provide a novel mechanism by which COUP-TFI acts as a negative regulator in the Ins2 promoter. The differentiation of bmMSCs into IPCs could be improved by knockdown of COUP-TFI, which may provide a novel stem cell-based therapy for T1D. Keywords: siRNAs, differentiation, stem cell transplantation, diabetes, mesenchymal stem cells