Nuclear reprogramming enables patient-specific derivation of induced pluripotent stem (iPS) cells from adult tissue. Yet, iPS generation from patients with type 2 diabetes (T2D) has not been demonstrated. Here, we report reproducible iPS derivation of epidermal keratinocytes (HK) from elderly T2D patients. Transduced with human OCT4, SOX2, KLF4 and c-MYC stemness factors under serum-free and feeder-free conditions, reprogrammed cells underwent dedifferentiation with mitochondrial restructuring, induction of endogenous pluripotency genes - including NANOG, LIN28, and TERT, and down-regulation of cytoskeletal, MHC class I- and apoptosis-related genes. Notably, derived iPS clones acquired a rejuvenated state, characterized by elongated telomeres and suppressed senescence-related p15INK4b/p16INK4a gene expression and oxidative stress signaling. Stepwise guidance with lineage-specifying factors, including Indolactam V and GLP-1, redifferentiated HK-derived iPS clones into insulin-producing islet-like progeny. Thus, in elderly T2D patients, reprogramming of keratinocytes ensures a senescence-privileged status yielding iPS cells proficient for regenerative applications.