Shortage of donor organs spurs research into alternative means of generating β cells. Stem cells might represent a potential source of tissues for cell therapy protocols, and diabetes is a candidate disease that may benefit from cell replacement protocols. We examined the effect of transplanted human umbilical cord blood CD34+ cells on some detailed parameters in streptozotocin-(STZ) induced diabetic mice. An experimental study was conducted in the departments of clinical pathology, physiology and pathology of Faculty of Medicine, Suez Canal University. Thirty male albino mice 8-12 weeks were included and subdivided into 3 groups, first group served as normal control group, second group as diabetic control after induction of diabetes with STZ and third group treated diabetic mice by injection of positively selected CD34 progenitor cells from human umbilical cord blood (HUCB) with a dose of one million cells/mouse. Blood glucose and serum insulin were measured at specific time interval and immunohistochemical (IHC) analysis and histopathology on pancreas were conduced. Data were analyzed using chi square between groups. Intravenous injection of CD34+ cells caused significant improvement in blood glucose level (277.9±102.5 mg/dl in treated group vs 530.3±99 mg/dl in untreated group, p<0.01). Blood level of mouse insulin was higher in the treated group as compared with untreated diabetic mice (0.77±0.2 ng/ml in treated group versus 0.26± 0.09 in untreated group, p<0.001). IHC analysis for detection of human insulin producing cells in pancreas of treated mice revealed that 33.3% positive cellular staining and 55.6% positive sinusoidal staining were detected. In conclusion, Transplantation of HUCB-CD34+ cells appear to be a modality of stem cell therapy in diabetes mellitus.