Gene therapy has been hyped as a possible 'cure' for diabetes mellitus in the near future ever since insulin was first cloned and expressed in cultured cells in the late 1970s. In the past decade, however, the bar for gene therapy for diabetes has been raised because of recent advances in the clinical management of diabetes. Although current treatment modalities fall far short of a cure, they produce greatly improved, if imperfect, glycemic control. In this context, we review the latest advances in in vivo gene therapy and conclude that the most widely applied strategy of insulin gene transfer does not measure up to the existing treatment options, whereas the recently proved concept of induced islet neogenesis has the potential of bettering the currently available therapy. Much work remains to be done, however, before this regimen can be taken from the bench to the bedside.