In this article, we have reviewed the developments of studies of stem cells therapy for type 1 diabetes since this century. Review of the literature was based on computer searches (PubMed) and our studies. Type 1 diabetes can now be ameliorated by islet transplantation, but this treatment is restricted by the scarcity of islet tissue. Hopes for a limitless supply of a substitute for primary islets of Langerhans and progress in stem cell biology have led to research into the feasibility of stem/progenitor cells to generate insulin-producing cells to use in replacement therapies for diabetes. An increasing body of evidence indicated that, in addition to embryonic stem cells, several potential adult stem/progenitor cells, derived from pancreas, liver, spleen, and bone marrow could differentiate into insulin-producing cells in vitro or in vivo. However, significant controversy currently exists in this field. Moreover, safe suppression of autoimmunity or specific tolerance to auto-antigens for patients with type 1 diabetes must be achieved before this promising new technology can lead to a great progress in clinical practice. To prevent type 1 diabetes through genetic engineering of hematopoietic stem cells represents another new strategy. Much basic research is still required.