Significant progress has been made in the field of beta-cell replacement therapies by islet transplantation in patients with unstable Type 1 diabetes mellitus (T1DM). Recent clinical trials have shown that islet transplantation can reproducibly lead to insulin independence when adequate islet numbers are implanted. Benefits include improvement of glycemic control, prevention of severe hypoglycemia and amelioration of quality of life. Numerous challenges still limit this therapeutic option from becoming the treatment of choice for T1DM. The limitations are primarily associated with the low islet yield of human pancreas isolations and the need for chronic immunosuppressive therapies. Herein the authors present an overview of the historical progress of islet transplantation and outline the recent advances of the field. Cellular therapies offer the potential for a cure for patients with T1DM. The progress in beta-cell replacement treatment by islet transplantation as well as those of emerging immune interventions for the restoration of self tolerance justify great optimism for years to come.