Diabetes mellitus (DM) is a degenerative disease of particular concern to developing countries, the latest figures showing that 11% (21 million people) of the Brazilian population are diabetic. 10% of these (2 million people) suffer from type 1 DM, in which insulin-producing ßcells are totally destroyed by an auto-immune mechanism, requiring daily insulin administration, while the remaining patients are resistant to insulin (type 2 DM). Glycemia control is almost impossible to achieve in hyperlabile DM1 patients, who are posed with two alternatives: whole pancreas or pancreatic islet transplantation, the former being highly invasive and life threatening while the latter constitutes a rapid, practical and minimally invasive procedure. However, allogeneic human islet transplantation still poses major challenges, one of which is the requirement for lifelong patient treatment with immunossupressants, which, in addition to being only partially effective, may cause a number of secondary effects. Islet microencapsulation and stem cells differentiation into insulin-producing ßcells have been pursued as attractive and promising alternatives to this problem and, also, to the scarcity of pancreas from human cadaveric donors. The following approaches have been taken by the NUCEL team to face these challenges: a) developing new biomaterials for islet encapsulation and diabetes reversal; b) differentiating stem cells isolated from different sources (mouse and human embryonic, human dental pulp, human mesenchymal skin cells and iPSCs) into insulin-producing cells; c) probing into the molecular basis for ßcells proliferation and differentiation. The novel biomaterials developed allow reversal of streptozotocin-induced diabetes by encapsulated rat islets in mice for at least 250 days. Insulin-producing cells were obtained from both murine embryonic cells and human mesenchymal cells (hMSCs). Genomics (DNA microarrays) and Proteomics (2D electrophoresis and mass spectrometry) allowed the isolation and identification of a number of genes and proteins related to ßcells differentiation and to the mitogenic effect of rhPRL on human ßcells, some of which constitute important target-molecules for development of novel DM therapy strategies. At the post-transcriptional control level, the miRNA profiles of both proliferating ßcells and differentiating hMSCs is currently being examined. Bone fracture and degeneration (osteoporosis) is being tackled both by a genomic approach and the production of different recombinant human Bone Morphogenetic Proteins (rhBMPs) in mammalian expression systems. A platform has been established for production of BMPs 2, 4 and 7, two of which have been transferred to a local pharma company for development of biopharmaceuticals to be used in human and animal Medicine and Dentistry. An additional result from this combined basic and applied research effort is a large number of highly qualified professionals and players for cell and molecular therapy.