Background: Type 1 and type 2 diabetes mellitus (T1D, T2D) represent global health challenges, projected to affect nearly 800 million individuals by 2050. Standard pharmacologic and insulin-based therapies manage hyperglycemia but fail to restore durable endogenous insulin secretion or halt disease progression. Stem cell–based therapies have emerged as a transformative modality, offering the potential for β-cell replacement, immune modulation, and systemic metabolic benefit.

Methods: We conducted a comprehensive narrative review of recent mechanistic advances, bioengineering innovations, and clinical trial data regarding stem cell–derived therapies for diabetes. Data sources included peer-reviewed publications, clinical trial registries, and landmark case studies reporting outcomes of pluripotent stem cell (PSC)-derived β-cell constructs, mesenchymal stem cells (MSCs), hematopoietic stem cells (HSCs), and engineered islet organoids.

Results: Preclinical studies have established robust protocols for differentiating PSCs into glucose-responsive β-cells and isletlike organoids, with engineered enhancements improving graft survival, vascularization, and metabolic resilience. Early-phase clinical trials demonstrate feasibility and efficacy. For example, autologous approaches achieve long-term insulin independence in a T2D patient using induced pluripotent stem cell–derived islets, whereas allogeneic constructs restored C-peptide production and eliminated severe hypoglycemia in T1D patients, with the majority achieving insulin independence. Gene-edited, hypoimmune islets in preclinical primates demonstrated long-term insulin independence without immunosuppression, highlighting the feasibility of off-the-shelf platforms. Further, engineered MSCs secreting GLP-1 and FGF21 improved glycemia and lipid metabolism in models, suggesting systemic cardiometabolic benefit beyond insulin replacement.