Diabetes is caused by insufficient insulin secretion due to β-cell dysfunction and/or β-cell loss. Therefore, the restoration of functional β-cells by the induction of β-cell differentiation from embryonic stem (ES) and induced-pluripotent stem (iPS) cells, or from somatic non-β-cells, may be a promising curative therapy. To establish an efficient and feasible method for generating functional insulin-producing cells, comprehensive knowledge of pancreas development and β-cell differentiation, including the mechanisms driving cell fate decisions and endocrine cell maturation is crucial. Recent advances in single-cell RNA sequencing (scRNA-seq) technologies have opened a new era in pancreas development and diabetes research, leading to clarification of the detailed transcriptomes of individual insulin-producing cells. Such extensive high-resolution data enables the inference of developmental trajectories during cell transitions and gene regulatory networks. Additionally, advancements in stem cell research have not only enabled their immediate clinical application, but also has made it possible to observe the genetic dynamics of human cell development and maturation in a dish. In this review, we provide an overview of the heterogeneity of islet cells during embryogenesis and differentiation as demonstrated by scRNA-seq studies on the developing and adult pancreata, with implications for the future application of regenerative medicine for diabetes.