Streptozotocin (STZ) is a pancreatic beta cells specific cytotoxin that causes direct organ toxicity and diabetes. Organ toxicity caused by streptozotocin can affect a variety of organs, including the liver. The present study discusses the impact of mesenchymal stem cells (MSCs) and placental extract (PE) on the streptozotocin damaged liver in rats. The animals in this study were divided into five groups, each with ten rats: group I (negative controls) and the other forty rats were given 50 mg/kg STZ for diabetes induction and then divided into; group II (positive controls), group III (MSCs treated), group IV (PE treated), and group V (MSCs/PE combination treated). Animals were slaughtered after four weeks of therapy, and serum was isolated for ALT, AST, and ALP determination. For histopathological analysis, liver tissues were sliced, washed in normal saline, and fixed in 10% formalin. When compared to positive controls, the three treated groups showed a major improvement in liver function parameters (P<0.05). Histopathological examination showed great improvement in the three treated groups where group V revealed the best picture. The present study points to the possible effects of PE and MSCs in treatment of liver damage. This action could be ascribed to MSCs homing in the liver and the restoration of liver tissues by PE contents of growth factors. These actions give a hope for diabetic patients suffering from a variety of complications since the regeneration effects of MSCs and PE have been expanded to include other damaged tissues.