Recent data suggests that transplanted bone marrow stem cells improve cardiac function in streptozotocin induced diabetic cardiomyopathy (SIDC). However, whether modified embryonic stem (ES) cells, induced pluripotent stem (iPS) cells, or factors released from these cells can inhibit apoptosis and fibrosis remains completely unknown. Therefore, we hypothesized that transplanted ES cells overexpressing pancreatic transcription factor 1 a (Ptf1a), a propancreatic endodermal transcription factor, iPS cells, or their respective conditioned media (CM) will attenuate cardiac remodeling and improve cardiac function in SIDC. Experimental diabetes was induced in male Sprague-Dawley rats (8-10 weeks old) by intraperitoneal injections of streptozotocin (STZ) (65 mg/kg body weight). Animals were divided into different groups including control, STZ, stem cells, and CM. Histology, TUNEL, caspase-3 activity, sarcomeric α-actin, and DHE stainings were performed to assess cardiac apoptosis, fibrosis, and oxidative stress. Animals transplanted with ES cells, iPS cells, or both CM showed a significant (p < 0.05) reduction in apoptosis compared with STZ treated animals. Furthermore, our data also shows that active apoptosis was present in cardiac myocytes as confirmed with combined stainings with TUNEL, sarcomeric α-actin, and active caspase-3 antibodies. Increased oxidative stress as evidenced by DHE staining was significantly (p < 0.05) reduced following stem cell or CM transplantation. Moreover, stem cells or CM also attenuated increased interstitial and vascular fibrosis in SIDC hearts. Echocardiography analysis showed a significant (p < 0.05) improvement in fractional shortening in stem cell and CM transplanted groups compared with respective controls. In conclusion, our data suggest that transplanted stem cells or their CM inhibit apoptosis, reduce fibrosis, and improve cardiac function in STZ-treated diabetic rats.