Human umbilical cord blood (HUCB) is being increasingly used as an alternative source of stem cells for cell-based therapy for malignant and nonmalignant diseases. HUCB is preferred to bone marrow because of its easy availability, low potential for graft-versus-host disease and tumorigenicity as well as infectious complications. Furthermore, no immunosuppression is required. In vitro and in vivo studies have shown that HUCB-derived stem cells can differentiate into insulin-secreting β-cells. Administration of HUCB cells has been shown to improve blood glucose levels in diabetic animals. The first use of autologous HUCB transfusion in type 1 diabetic children is showing promise in reducing the daily requirement of insulin dose and the maintenance of near normoglycemia over a short period of time. The time has come for more clinical trials using autologous and allogenic cord blood transfusion to treat diabetes mellitus.