Abstract: A process for producing an insulin-producing conditionally transformed pancreatic cell line is provided. The process of the present invention comprises the steps of preparing and culturing a population of insulin-producing pancreatic beta cells, preparing and culturing a suitable strain of Rous sarcoma virus containing a temperature sensitive lesion in the viral transforming or sarc gene, and infecting the insulin-producing pancreatic cells with the temperature sensitive virus. The infected pancreatic cells are conditionally transformed by the temperature-sensitive virus to provide an insulin-producing system especially suited for both in vitro and in vivo application. Methods for evaluating the safety of the system for application in vivo are also disclosed.