Background: Diabetes mellitus (DM) is one of the most recognizable endocrine metabolic disorders characterized by chronic hyperglycemia.Mesenchymalstem cells (MSCs) are promising toolto treatDM type I (DM 1). They can be isolated from many sources including adipose tissue because of its easy availability. Objective: Evaluation of the effect of adipose derived MSCs (ADMSCs) on streptozotocin (STZ)-induced DM in rats. Materials and Methods: Forty eight adult male albino rats were included and divided into 4 equal groups. Group I: control untreated, group II: diabetic group, group III: insulin-treated group, and group IV: ADMSCs-treated group. After 21 days from treatment, animals were sacrificed and pancreas was obtained for histological assessments. Stem cell homing was detected by polymerase chain reaction for human specific Alu gene. Results: ADMSCs caused lowering of blood glucose levels starting at the 14th day of treatment and increased blood insulin levels accompanied by reversal of the histopathological changes that were found in the diabetic group and increase insulin secreting cells. Conclusion: ADMSCs improved blood glucose levels and reversed the histopathological changes of the pancreas in experimentally induced DM I.