Geriatric diabetes is a prevalent chronic metabolic disorder in the elderly population, and type 2 diabetes mellitus accounts for the vast majority of cases. Its core pathogenesis lies in pancreatic islet β-cell damage and insulin resistance. At present, there is no radical cure for this disease in clinical practice. Patients rely on long-term hypoglycemic drugs to maintain blood glucose homeostasis, while such treatments show limited efficacy in preventing and managing diabetic complications. As "seed cells" with self-renewal and multi-lineage differentiation potential, stem cells have achieved definite therapeutic effects in the treatment of various refractory diseases. Recent studies have verified that stem cells can exert hypoglycemic effects via regulating glucose metabolism, improving the secretory function of islet cells, promoting the proliferation and differentiation of insulin-secreting cells, repairing damaged pancreatic islet β-cells, facilitating pancreatic angiogenesis and tissue reconstruction, modulating immune function, alleviating chronic inflammatory responses, and enhancing insulin sensitivity of peripheral tissues. This paper systematically reviews the current research status of stem cells in the treatment of geriatric diabetes, analyzes the deficiencies of existing studies, and further explores the application value of stem cells from the perspective of action mechanisms, providing a theoretical basis for basic research and clinical transformation in this field.