Type 1 diabetes mellitus (T1DM) is a growing global health concern that affects approximately 8.5 million individuals worldwide. T1DM is characterized by an autoimmune destruction of pancreatic β cells, leading to a disruption in glucose homeostasis. Therapeutic intervention for T1DM requires a complex regimen of glycaemic monitoring and the administration of exogenous insulin to regulate blood glucose levels. Advances in continuous glucose monitoring and algorithm-driven insulin delivery devices have improved the quality of life of patients. Despite this, mimicking islet function and complex physiological feedback remains challenging. Pancreatic islet transplantation represents a potential functional cure for T1DM but is hindered by donor scarcity, variability in harvested cells, aggressive immunosuppressive regimens and suboptimal clinical outcomes. Current research is directed towards generating alternative cell sources, improving transplantation methods, and enhancing cell survival without chronic immunosuppression. This Review maps the progress in cell replacement therapies for T1DM and outlines the remaining challenges and future directions. We explore the state-of-the-art strategies for generating replenishable β cells, cell delivery technologies and local targeted immune modulation. Finally, we highlight relevant animal models and the regulatory aspects for advancing these technologies towards clinical deployment.