Diabetes mellitus has rapidly become a 21st century epidemic with the promise to create vast economic and health burdens, if left unchecked. The 2 major forms of diabetes arise from unique causes, with outcomes being an absolute (type 1) or relative (type 2) loss of functional pancreatic islet β-cell mass. Currently, patients rely on exogenous insulin and/or other pharmacologies that restore glucose homeostasis. Although these therapies have prolonged countless lives over the decades, the striking increases in both type 1 and type 2 diabetic diagnoses worldwide suggest a need for improved treatments. To this end, islet biologists are developing cell-based therapies by which a patient's lost insulin-producing β-cell mass is replenished. Pancreatic or islet transplantation from cadaveric donors into diabetic patients has been successful, yet the functional islet demand far surpasses supply. Thus, the field has been striving toward transplantation of renewable in vitro-derived β-cells that can restore euglycemia. Challenges have been numerous, but progress over the past decade has generated much excitement. In this review we will summarize recent findings that have placed us closer than ever to β-cell replacement therapies. With the promise of cell-based diabetes therapies on the horizon, we will also provide an overview of cellular encapsulation technologies that will deliver critical protection of newly implanted cells.