Insulin represents a life-saving treatment in patients with type 1 diabetes, and technological advancements have improved glucose control in an increasing number of patients. Despite this, adequate control is often still difficult to achieve and insulin remains a therapy and not a cure for the disease. β-cell replacement strategies can potentially restore pancreas endocrine function and aim to maintain normoglycemia; both pancreas and islet transplantation have greatly progressed over the last decades and, in subjects with extreme glycemic variability and diabetes complications, represent a concrete and effective treatment option. Some issues still limit the adoption of this approach on a larger scale. One is represented by the strict selection criteria for the recipient who can benefit from a transplant and maintain the lifelong immunosuppression necessary to avoid organ rejection. Second, with regard to islet transplantation, up to 40% of islets can be lost during hepatic engraftment. Recent studies showed very preliminarily but promising results to overcome these hurdles: the ability to induce β-cell maturation from stem cells may represent a solution to the organ shortage, and the creation of semi-permeable membranes that envelope or package cells in either micro- or macro- encapsulation strategies, together with engineering cells to be hypo-immunogenic, pave the way for developing strategies without immunosuppression. The aim of this review is to describe the state of the art in β-cell replacement with a focus on its efficacy and clinical benefits, on the actual limitations and still unmet needs, and on the latest findings and future directions.