Diabetes remains a major burden, with more than 200 million people affected worldwide, representing 6% of the population. New technology, known as protein transduction technology, has been recently developed. A variety of peptides, known as protein transduction domains or cell-penetrating peptides, have been characterized for their ability to translocate into live cells. There are numerous examples of biologically active full-length proteins and peptides that have been delivered to cells and tissues both in vitro and in vivo, suggesting new avenues for the treatment of several diseases. Some studies have shown that this technology is useful for the treatment of diabetes. In islet isolation and transplantation, cell-permeable peptides deliver anti-apoptotic molecules to protect islets. Another peptide provides immunosuppression for fully mismatched islet allografts in mice. These findings suggest that peptide drugs could lead to outcome improvement for pancreatic islet transplantation. In mice with type 2 diabetes, a cell-penetrating peptide markedly improves insulin resistance and ameliorates glucose tolerance. Moreover, the technology facilitates the differentiation of stem cells into insulin-producing cells. Protein transduction technology has opened up several possibilities for the development of new peptide/protein drugs for the treatment of diabetes.