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Progressive and inexorable β-cell dysfunction is the hallmark of type 2 diabetes mellitus (T2DM) and β-cell regeneration using stem cell therapy may prove to be an effective modality. A total of 10 patients (8 men) with T2DM for >5 years, failure of triple oral antidiabetic drugs, currently on insulin (≥0.7 U/kg/day) at least for 1 year, and glutamic acid decarboxylase antibody negative were included. Patients on stable doses of medications for past 3 months were recruited. Primary end points were reduction in insulin requirement by ≥50% and improvement in glucagon-stimulated C-peptide levels at the end of 6 months of autologous bone marrow–derived stem cell transplantation (SCT), while secondary end points were a change in weight and HbA1c and lipid levels as compared to baseline. Seven patients were responders and showed a reduction in insulin requirement by 75% as compared to baseline. Mean duration to achieve the primary objective was 48 days. Three patients were able to discontinue insulin completely, although it was short-lived in one. Mean HbA1c reduction was 1% and 3 of the 7 responders had HbA1c value <7%. A significant weight loss of 5.5 kg was noted in the responders, whereas, nonresponders gained 2.2 kg of weight. However, weight loss did not correlate with reduction in insulin requirement (r = 0.68, P = 0.06). There was a significant improvement in both fasting and glucagon-stimulated C-peptide level in the group (P = 0.03) and responders (P = 0.03). HOMA-B increased significantly in the whole group (P = 0.02) and responders (P = 0.04) whereas, HOMA-IR did not change significantly (P = 0.74). Reduction in insulin doses correlated with stimulated C-peptide response at the baseline (r = 0.83, P = 0.047) and mononuclear cell count of infused stem cells (r = 0.57, P = 0.04). No serious adverse effects were noted. Our observations indicate that SCT is a safe and effective modality of treatment to improve β-cell function in patients with T2DM. However, further large-scale studies are needed to substantiate these observations.