Our hypothesis is that hyaluronic acid may regulate the differentiation of human amniotic epithelial cells (hAECs) into insulin-producing cells and help the treatment of type 1 diabetes. Herein, a protocol for the stepwise in vitro differentiation of hAECs into functional insulin-producing cells was developed by mimicking the process of pancreas development. Treatment of hAECs with hyaluronic acid enhanced their differentiation of definitive endoderm and pancreatic progenitors. Endodermal markers Sox17 and Foxa2 and pancreatic progenitor markers Pax6, Nkx6.1, and Ngn3 were upregulated an enhanced gene expression in hAECs, but hAECs did not express the β cell-specific transcription factor Pdx1. Interestingly, hyaluronic acid promoted the expression of major pancreatic development-related genes and proteins after combining with commonly used inducers of stem cells differentiation into insulin-producing cells. This indicated the potent synergistic effects of the combination on hAECs differentiation in vitro. By establishing a multiple injection transplantation strategy via tail vein injections, hAECs transplantation significantly reduced hyperglycemia symptoms, increased the plasma insulin content, and partially repaired the islet structure in type 1 diabetic mice. In particular, the combination of hAECs with hyaluronic acid exhibited a remarkable therapeutic effect compared to both the insulin group and the hAECs alone group. The hAECs' paracrine action and hyaluronic acid co-regulated the local immune response, improved the inflammatory microenvironment in the damaged pancreas of type 1 diabetic mice, and promoted the trans-differentiation of pancreatic α cells into β cells. These findings suggest that hyaluronic acid is an efficient co-inducer of the differentiation of hAECs into functional insulin-producing cells, and hAECs treatment with hyaluronic acid may be a promising cell-replacement therapeutic approach for the treatment of type 1 diabetes.