Abstract Diabetes mellitus regardless of the type, its associated complications and the tendency to inherit the condition due to genetic reasons have affected world wide and is increasing at a rapid pace. Although there are effective ways to manage this condition, none of them stops the progressive decline of the beta cell functioning. The existing treatment modalities only delays the complications. Pancreatic islet transplantation have been promising with patients being insulin independent for initial few years post transplant, but over the period of time they restart their daily insulin injections. Even though stem cell therapy for diabetes is currently being investigated, its recent progress has been assuring one. Stem cell therapy does not face risk like graft rejection requiring immunosuppression or complications associated with the procedure and post transplant unlike the pancreatic islet transplantation, since they can withdrawn from the diabetic patient and injected back, thus eliminating issues like lack of donors. This review shows the potential of hematopoeitic stem cell and mesenchymal stem cell therapy as a good alternative approach in treating diabetes.