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Selective MSCs differentiation protocol into pancreatic beta cells was conducted in the present study using exendin-4 and TGF-beta. Differentiated and undifferentiated MSCs were assessed in experimental type I diabetes in rats. Ninety female white albino rats were included in the study and divided equally (n=15/group) into 6 groups: healthy control, healthy control rats received acellular tissue culture medium, diabetic rats, diabetic rats received acellular tissue culture medium, diabetic rats received undifferentiated MSCs and diabetic rats received differentiated MSCs. Therapeutic efficacy of undifferentiated versus differentiated MSCs was evaluated via assessment of quantitative gene expressions of insulin1, insulin 2, Smad-2, Smad-3, PDX-1, PAX-4, neuroD. Blood glucose and insulin hormone levels were also assessed. Results showed that quantitative gene expressions of all studied genes showed significant decrease in diabetic rat groups. Use of undifferentiated and differentiated MSCs led to a significant elevation of expression levels of all genes with more superior effect with differentiated MSCs except smad-2 gene. As regards insulin hormone levels, use of either undifferentiated or differentiated MSCs led to a significant elevation of its levels with more therapeutic effect with differentiated MSCs. Blood glucose levels were significantly decreased with both undifferentiated and differentiated MSCs in comparison to diabetic groups but its levels were normalized 2 months after injection of differentiated MSCs. In conclusion, use of undifferentiated or differentiated MSCs exhibited significant therapeutic potentials in experimental type I diabetes in rats with more significant therapeutic effect with the use of differentiated MSCs.