Diabetes mellitus type 1 is an autoimmune disorder that leads to β cell destruction and lowered insulin production. The approach of using  stem cells in the clinical field has refocused the objectives of islet transplantation. Accordingly, in the present study experimental rats pancreatic β cells damage was induced using alloxan. Mesenchymal stem cells (MSCs) were separated from bone marrow and differentiated into insulin-producing pancreatic cells. Both undifferentiated mesenchymal stem cells or early differentiated insulin-producing pancreatic cells were injected into the alloxan-treated female albino rats. In addition, alloxan-treated rats were then exposed to 6 Gy γ-radiation prior to cells injection by 24 hours for immunosupression. The rats were monitored for blood glucose levels along the period of the experiment. The results showed that the mean of postprandial blood glucose levels of the diabetic rats with undifferentiated mesenchymal stem cell transplantation or early differentiated insulin-producing pancreatic cells, either exposed to ionizing radiation before cell injection or not, were significantly lower than those of the diabetic rats without cell transplantation. In addition the histological observations showed an amelioration after cell therapy either with or without radiation, as the necrotic cells were just few after 15 days and were absent after 30 days in case of treatment with MSCs. Treatment with early differentiated insulin-producing pancreatic cells after 30 days revealed blood capillary enclosing erythocytes in association with presumably early differentiated pancreatic cells and the migration of  these cells into the neighbouring islet tissue. It is concluded that undifferentiated mesenchymal stem cells or early differentiated insulin-producing pancreatic cell therapy have the potential to successfully repair the damage induced by alloxan in rats pancreatic β-cells.