The prevalence of diabetes continues to rise, and traditional treatments struggle to reverse the decline in pancreatic islet β cell function. Cell therapy offers a new pathway for functional cure by restoring or replacing endogenous insulin secretion. This article systematically reviews the clinical progress of four major strategies: islet transplantation, stem cell-derived islets, mesenchymal stem cells (MSCs), and immune cell therapy. Islet transplantation has been clinically applied but is limited by the shortage of donors; stem cell-derived islets have made breakthroughs in providing a limitless cell source; MSCs improve glycemic control through immunomodulation; and immune cell therapy aims to restore immune tolerance. Each approach faces challenges such as immune rejection, cell survival, and functional maturation. Emerging technologies like gene editing, cell encapsulation, and 3D bioprinting offer novel solutions to these bottlenecks. Future research should focus on the development of universal cell products, precise immunological interventions, and multi-mechanism synergistic therapies to propel diabetes treatment from "glucose control" towards "functional reconstruction".