Pluripotent stem cells(PSCs) are able to differentiate into several cell types, including pancreatic β cells. Differentiation of pancreatic β cells depends on certain transcription factors, which function in a coordinated way during pancreas development. The existing protocols for in vitro differentiation produce pancreatic β cells, which are not highly responsive to glucose stimulation except after their transplantation into immune-compromised mice and allowing several weeks for further differentiation to ensure the maturation of these cells in vivo. Thus, although the substantial improvement that has been made for the differentiation of induced PSCs and embryonic stem cells toward pancreatic β cells, several challenges still hindering their full generation. Here, we summarize recent advances in the differentiation of PSCs into pancreatic β cells and discuss the challenges facing their differentiation as well as the different applications of these potential PSC-derived β cells. Differentiation of pancreatic β cells depends on certain transcription factors, which function in a coordinated way during pancreas development. The existing protocols for in vitro differentiation produce pancreatic β cells, which are not highly responsive to glucose stimulation except after their transplantation into immune-compromised mice and allowed for several weeks for further differentiation to ensure the maturation of these cells in vivo. Thus, although the substantial improvement that has been made for the differentiation of induced PSCs and embryonic stem cells toward pancreatic β cells, several challenges still hindering their full generation. Here, we summarize recent advances in the differentiation of PSCs into pancreatic β cells and discuss the challenges facing their differentiation as well as the different applications of these potential PSC-derived β cells.