The development of pancreatic islet endocrine cells is a tightly regulated process leading to the generation of distinct cell types harbouring different hormones in response to small changes in environmental stimuli. Cell differentiation is driven by transcription factors that are also critical for the maintenance of the mature islet cell phenotype. Alteration of the insulin‐secreting β‐cell transcription factor set by prolonged metabolic stress, associated with the pathogenesis of diabetes, obesity or pregnancy, results in the loss of β‐cell identity through de‐ or transdifferentiation. Importantly, the glucose‐lowering effects of approved and experimental antidiabetic agents, including glucagon‐like peptide‐1 mimetics, novel peptides and small molecules, have been associated with preventing or reversing β‐cell dedifferentiation or promoting the transdifferentiation of non‐β‐cells towards an insulin‐positive β‐cell‐like phenotype. Therefore, we review the manifestations of islet cell plasticity in various experimental settings and discuss the physiological and therapeutic sides of this phenomenon, focusing on strategies for preventing β‐cell loss or generating new β‐cells in diabetes. A better understanding of the molecular mechanisms underpinning islet cell plasticity is a prerequisite for more targeted therapies to help prevent β‐cell decline in diabetes.