Despite many years of research, daily insulin injections remain the gold standard for diabetes treatment. Gene therapy may provide an alternative strategy by imparting the ability to secrete insulin from an ectopic site. The epidermis is a self-renewing tissue that is easily accessible and can provide large numbers of autologous cells to generate insulin-secreting skin substitutes. Here we used a recombinant retrovirus to modify human epidermal keratinocytes with a gene encoding for human proinsulin containing the furin recognition sequences at the A-C and B-C junctions. Keratinocytes were able to process proinsulin and secrete active insulin that promoted glucose uptake. Primary epidermal cells produced higher amounts of insulin than cell lines, suggesting that insulin secretion may depend on the physiological state of the producer cells. Modified cells maintained the ability to stratify into 3-dimensional skin equivalents that expressed insulin at the basal and suprabasal layers. Modifications at the furin recognition sites did not improve proinsulin processing, but a single amino acid substitution in the proinsulin B chain enhanced C-peptide secretion from cultured cells and bioengineered skin substitutes 10- and 28-fold, respectively. These results suggest that gene-modified bioengineered skin may provide an alternative means of insulin delivery for treatment of diabetes.