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In this review, we present (1) a brief discussion of hematopoietic stem cell transplantation (HSCT) for severe and refractory autoimmune diseases (AIDs) from its beginning in 1996 through recently initiated prospective randomized clinical trials; (2) an update (up to July 2009) of clinical and laboratory outcomes of 23 patients with newly diagnosed type 1 diabetes mellitus (T1DM), who underwent autologous HSCT at the Bone Marrow Transplantation Unit of the Ribeirão Preto Medical School, University of São Paulo, Brazil; (3) a discussion of possible mechanisms of action of HSCT in AIDs, including preliminary laboratory data obtained from our patients; and (4) a discussion of future perspectives of stem cell therapy for T1DM and type 2 DM, including the use of stem cell sources other than adult bone marrow and the combination of cell therapy with regenerative compounds.