Diabetes has long-term, potentially severe implications for healthspan and lifespan and imposes an immense burden on global healthcare, the economy and society. Although a repertoire of medications is available to treat diabetes, these do not properly address the eventual lack of functional pancreatic beta cells that are needed to secrete insulin and maintain glucose homeostasis. Human islet cell transplantation from deceased donors is an established treatment for insulin-requiring type 1 diabetes, but demand outstrips supply. Substantial scientific and clinical progress has occurred in the last decade toward deriving pancreatic islet-like cells from human pluripotent stem cells, suggesting a potentially limitless solution to the supply issue and a new era in cell therapy for diabetes. Here, we critically review the scientific advances, the clinical trials and the various regulatory considerations that will need to be overcome for human stem cell-derived pancreatic islet-like cells to become the next cell therapy breakthrough for diabetes treatment.