Studies aimed at the understanding of the multifactorial development of autoimmune diabetes have made substantial contributions toward elucidating the molecular mechanisms that open the road to an effective prevention of defective immune responses. Immunomodulatory regimens capable of inducing tolerance are shown to be effective even in the reversal of established autoimmune diabetes in animal models. Experimental trials including the reeducation of autoreactive T cells, depletion of macrophages, dendritic cells, and T cells, as well as the use of monoclonal antibodies, have yielded encouraging results, but have not yet been translated into beneficial clinical outcomes. In addition, we are now seeing an emergence of promising new directions aimed at the induction of islet regeneration by endogenous factors, suggesting that the repair of pancreatic tissue is possible without the need for an engraftment of donor tissue. These recent waves of technological progress have injected new hope for a combined therapy to offer diabetic patients longterm benefits of insulin independence. This article reviews the latest findings on diabetic pathogenesis and discusses promising avenues to tolerance induction and islet regeneration.