Type 1 diabetes (T1D) is a chronic autoimmune disease characterized by the destruction of pancreatic β-cells, leading to insulin deficiency. Insulin replacement therapy is the current standard of care for T1D, but it has significant limitations. However, stem cell-based replacement therapy has the potential to restore β-cell function and achieve glycaemic control eradicating the necessity for drugs or injecting insulin externally. While significant progress has been made in preclinical studies, the clinical translation of stem cell therapy for T1D is still in its early stages. In continuation, further research is essentially required to determine the safety and efficacy of stem cell therapies and to develop strategies to prevent immune rejection of stem cell-derived β-cells. The current review highlights the current state of cellular therapies for T1D including, different types of stem cell therapies, gene therapy, immunotherapy, artificial pancreas, and cell encapsulation being investigated, and their potential for clinical translation.