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Type 1 diabetes mellitus (T1D) is a chronic, multifactorial autoimmune disease that involves the progressive destruction of pancreatic β-cells, ultimately resulting in the loss of insulin production and secretion. The goal of clinical intervention is to prevent or arrest the onset and progression of autoimmunity, reverse β-cell destruction, and restore glycometabolic and immune homeostasis. Despite promising outcomes observed with islet transplantation and advancements in immunomodulatory therapies, the need for an effective cell replacement strategy for curing T1D still persists. Stem cell therapy offers a solution to the cited challenges of islet transplantation. While the regenerative potential of stem cells can be harnessed to make available a self-replenishing supply of glucose-responsive insulin-producing cells, their immunomodulatory properties may potentially be used to prevent, arrest, or reverse autoimmunity, ameliorate innate/alloimmune graft rejection, and prevent recurrence of the disease. Herein, we discuss the therapeutic potential of stem cells derived from a variety of sources for the cure of T1D, for example, embryonic stem cells, induced pluripotent stem cells, bone marrow-derived hematopoietic stem cells, and multipotent mesenchymal stromal cells derived from bone marrow, umbilical cord blood, and adipose tissue. The benefits of combinatorial approaches designed to ensure the successful clinical translation of stem cell therapeutic strategies, such as approaches combining effective stem cell strategies with islet transplantation, immunomodulatory drug regimens, and/or novel bioengineering techniques, are also discussed. To conclude, the application of stem cell therapy in the cure for T1D appears extremely promising.