Cell therapy has enormous potential for the treatment of conditions of unmet medical need. Cell therapy may be applied to diabetes mellitus in the context of beta cell replacement or for the treatment of diabetic complications. A large number of cell types including hematopoietic stem cells, mesenchymal stem cells, umbilical cord blood, conditioned lymphocytes, mononuclear cells, or a combination of these cells have been shown to be safe and feasible for the treatment of patients with diabetes mellitus. The first part of this review article will focus on the current perspective of the role of embryonic stem cells and inducible pluripotent stem cells for beta cell replacement and the current clinical data on cell-based therapy for the restoration of normoglycemia. The second part of this review will highlight the therapeutic role of MSCs in islet cells cotransplantation and the management of diabetes related vascular complications.