Diabetes is a group of metabolic diseases in which there are high blood sugar levels over a prolonged period. Untreated, diabetes can cause many complications. There are two main types of diabetes mellitus. Diabetes is due to either the pancreas not producing enough insulin (Type I DM), or the cells of the body not responding properly to the insulin produced (Type II DM). Currently available treatment (medicines, diet, insulin injection and exercise) can control blood sugar but cannot cure diabetes. Over the past several years, doctors have attempted to cure diabetes via transplanting functional insulin producing beta-islet cells and pancreas from donor. However, the requirement for steroid immunosuppressant therapy to prevent rejection of the pancreatic cells, increases the metabolic demand on insulin-producing cells and eventually they may exhaust their capacity to produce insulin and also shown deleterious effect on pancreas cell and shown less successful result. At present, stem cell therapy has shown promising results for diabetes mellitus because Mesenchymal Stem Cells (MSCs) are known to be capable of releasing growth factors contributing to an increase in angiogenesis and stabilisation of the vasculature and to enhance proliferation of pancreatic beta-islet cells. They have also immunomodulatory function which stops the immune attack by secreting anti-inflammatory cytokines (IL-10, TGF-beta and IL-1). On the other hand, stem cell will transform itself to insulin-producing pancreatic cells that will replace pancreas with new cells. Thus offer promising therapeutic potential for treating diabetes.