Pancreatic islet transplantation is a promising method for the treatment of type 1 and type 3 diabetes whereby replacement of islets may be curative. However, long-term treatment with immunosuppressive drugs (ISDs) remains essential for islet graft survival. Current ISD regimens carry significant side-effects for transplant recipients, and are also toxic to the transplanted islets. Pre-clinical efforts to induce immune tolerance to islet allografts identify ways in which the recipient immune system may be reeducated to induce a sustained transplant tolerance and even overcome autoimmune islet destruction. The goal of these efforts is to induce tolerance to transplanted islets with minimal to no long-term immunosuppression. Two most promising cell-based therapeutic strategies for inducing immune tolerance include T regulatory cells (Tregs) and donor and recipient hematopoietic mixed chimerism. Here, we review preclinical studies which utilize Tregs for tolerance induction in islet transplantation. We also review myeloablative and non-myeloablative hematopoietic stem cell transplantation (HSCT) strategies in preclinical and clinical studies to induce sustained mixed chimerism and allograft tolerance, in particular in islet transplantation. Since Tregs play a critical role in the establishment of mixed chimerism, it follows that the combination of Treg and HSCT may be synergistic. Since the success of the Edmonton protocol, the feasibility of clinical islet transplantation has been established and nascent clinical trials testing immune tolerance strategies using Tregs and/or hematopoietic mixed chimerism are underway or being formulated.