Type 1 diabetes therapies that afford tighter glycemic control in a more manageable and painless manner for patients has remained a central focus of next-generation diabetes therapies. In many of these emerging technologies, namely, self-regulated insulin delivery and cell replacement therapies, hydrogels are employed to mitigate some of the most long-standing challenges. In this Review, we summarize recent developments in the use of hydrogels for both insulin delivery and insulin-producing cell therapies for type 1 diabetes management. We first outline perspectives in glucose sensitive hydrogels for smart insulin delivery, pH sensitive polymeric hydrogels for oral insulin delivery, and other physiochemical signals used to trigger insulin release from hydrogels. We, then, investigate the use of hydrogels in the encapsulation of insulin secreting cells with a special emphasis on hydrogels designed to mitigate the foreign body response, provide a suitable extracellular microenvironment, and improve mass transfer through oxygen supplementation and vascularization. Evaluations of limitations and promising directions for future research are also considered. Continuing interdisciplinary and collaborative research efforts will be required to produce hydrogels with instructive biochemical microenvironments necessary to address the enduring challenges of emerging type 1 diabetes therapies.