The rapidly increasing number of diabetes patients across the world poses a great challenge to the current therapeutic approach. The traditional method of exogenous supply of insulin has ephemeral effect and often causes lethal hypoglycemia that demands to develop a novel strategy. Recent investigations on regeneration of insulin producing cells (IPCs) revealed that in addition to primary source i.e., pancreatic beta cells, IPCs can be derived from several alternative sources including embryonic, adult, mesenchymal and hematopoietic stem cells via the process of proliferation, dedifferentiation, neogenesis, nuclear reprogramming and transdifferentiation. There is considerable success in insulin independency of diabetes patient after transplantation of whole pancreas and/or the islet cells. However, the major challenge for regenerative therapy is to obtain a large source of islet/beta cells donor. Recent advances in the directed differentiation of stem cells generated a promising hope for a better and permanent insulin independency for diabetes. In this review we discussed stem cells as a potential future therapeutic target for the treatment of diabetes and associated diseases.