The main objective of this work is to assess the role of nicotinamide in protecting β-cells of rat's pancreas after STZ injection and to study the therapeutic potency of bone marrow mesenchymal stem cells in STZ-induced diabetic rats. Ten male albino rats were sacrificed and used for isolation and differentiation of MSCs into insulin producing cells within 4 weeks. Fifty male albino rats were divided into 5 groups. Group (1): normal control. The other groups were injected with STZ 50 mg/kg b.w. for induction of diabetes. Group (2): diabetic control, group (3): diabetic rats received oral nicotinamide (NIC) 100 mg/kg b.w. daily (NIC group), group (4): diabetic rats injected subcutaneously with differentiated MSCs 5x106 cells per rat (MSCs group), group (5): diabetic rats injected subcutaneously with differentiated MSCs 5x106 cells per rat and received oral NIC 100 mg/kg b.w. daily (MSCs + NIC group) the treatment continued for 4 weeks. The results indicated that injection with MSCs and administration of oral NIC ameliorate the glucose homeostasis by decreasing blood glucose and increasing insulin and C-peptide levels, improving antioxidant status by decreasing serum MDA level and increasing the activity of (serum TOC, liver SOD and GPX), serum lipid profile TC, TAGs, LDL-C and VLDL-C were deceased while HDL-C was increased while using both of MSCs and NIC caused more improvement which was evidenced in the histopathological examination of pancreatic cells. In conclusion: treatment with nicotinamide improves the diabetic state of rats as nicotinamide is believed to have anti-hyperglycemic and anti-oxidant properties. MSCs were successfully differentiated into numerous numbers of β-cells and injection with 5×106 MSCs clearly support pancreas tissue repair.