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Transdifferentiation (or metaplasia) refers to the conversion of one cell type to another. Because transdifferentiation normally occurs between cells that arise from the same region of the embryo, understanding the molecular and cellular events in cell type transformations may help to explain the mechanisms underlying normal development. Here we review examples of transdifferentiation in nature focusing on the possible role of cell type switching in metamorphosis and regeneration. We also examine transdifferentiation in mammals in relation to disease and the use of transdifferentiated cells in cellular therapy.