The development of new therapeutic approaches to treat type 1 diabetes mellitus (T1D) relies on the precise understanding and deciphering of insulin-secreting β-cell biology, as well as the mechanisms responsible for their autoimmune destruction. β-cell or islet transplantation is viewed as a potential long-term therapy for the millions of patients with diabetes. To advance the field of insulin-secreting cell transplantation, two main research areas are currently investigated by the scientific community: (1) the identification of the developmental pathways that drive the differentiation of stem cells into insulin-producing cells, providing an inexhaustible source of cells; and (2) transplantation strategies and engineered transplants to provide protection and enhance the functionality of transplanted cells. In this review, we discuss the biology of pancreatic β-cells, pathology of T1D and current state of β-cell differentiation. We give a comprehensive view and discuss the different possibilities to engineer enhanced insulin-secreting cell/islet transplantation from a translational perspective.