The incidence of diabetes mellitus (DM) is steadily increasing annually, with 537 million diabetic patients as of 2021. Restoring diminished β cell mass or impaired islet function is crucial in treating DM, particularly type 1 diabetes mellitus (T1DM). However, the regenerative capacity of islet β cells, which primarily produce insulin, is severely limited, and natural regeneration is only observed in young rodents or children. Hence, there is an urgent need to develop advanced therapeutic approaches that can regenerate endogenous β cells or replace them with stem cell (SC)-derived or engineered β-like cells. Current strategies for treating insulin-dependent DM mainly include promoting the self-replication of endogenous β cells, inducing SC differentiation, reprogramming non-β cells into β-like cells, and generating pancreatic-like organoids through cell-based intervention. In this Review, we discuss the current state of the art in these approaches, describe associated challenges, propose potential solutions, and highlight ongoing efforts to optimize β cell or islet transplantation and related clinical trials. These effective cell-based therapies will generate a sustainable source of functional β cells for transplantation and lay strong foundations for future curative treatments for DM.