Although diabetes can be managed clinically with the use of insulin injections, it remains an incurable and inconvenient disorder. In the long-term, it is associated with a number of clinical complications, such as cardiovascular disease, resulting in a desire for the development of new methodologies to replace defective cells and provide a lasting normality without the need for drug treatment. Stem cells, including induced pluripotent stem cells, offer the possibility of generating cells suitable for transplantation due to their capacity to differentiate into all tissue lineages. However, many issues must be addressed before this type of treatment becomes a reality, including the need for a greater understanding of the underlying biology involved in the onset of diabetes.