Islet cell replacement represents the most promising approach for the treatment of type I diabetes. However, it is limited by a shortage of pancreas donors. Here, we report that human amniotic fluid-derived stem cells (hAFSCs) can be induced to differentiate into functional insulin-producing cells by knocking down neuronal restrictive silencing factor (NRSF). In this study, lentiviral vectors were used to deliver small interference NRSF (siNRSF) RNA into hAFSCs. After infection with lentivirus containing siNRSF, hAFSCs were successfully induced to differentiate into insulin-producing cells. The differentiated siNRSF-hAFSCs expressed genes specific for islet cells, such as Pdx1, Hnf4α, Isl-1, Nkx6.1, Insulin, and Glut2. These cells also produced and released C-peptide in a glucose-responsive manner. These findings indicated that hAFSCs could be induced to differentiate into insulin-producing β-like cells by NRSF silencing.