Insulin-secreting beta cells were thought to reside only in the pancreas. Here, we show that beta cells are also present in the extra-hepatic bile ducts of mice. They are characterised by insulin and C-peptide content, the presence of secretory granules that are immunoreactive for insulin, and the ducts exhibit glucose-stimulated insulin secretion. Genetic lineage labelling shows that these beta cells arise from the liver domain rather than the pancreas and, by histological study, they appear to be formed directly from the bile duct epithelium in late embryogenesis. Other endocrine cell types (producing somatostatin and pancreatic polypeptide) are also found in close association with the bile-duct-derived beta cells, but exocrine pancreatic tissue is not present. This discovery of beta cells outside the mammalian pancreas has implications for regenerative medicine, indicating that biliary epithelium might offer a new source of beta cells for the treatment of diabetes. The finding also has evolutionary significance, because it is known that certain basal vertebrates usually form all of their beta cells from the bile ducts. The mammalian bile-duct-derived beta cells might therefore represent an extant trace of the evolutionary origin of the vertebrate beta cell.