The use of adult stem cells for therapeutic purposes has met with great success in recent years. Among several types of adult stem cells, mesenchymal stem cells (MSCs) derived from bone marrow (BM) and other sources have gained popularity for basic research and clinical applications because of their therapeutic potential in treating a variety of diseases. Because of their tissue regeneration potential and immune modulation effect, MSCs were recently used as cell-based therapy to promote revascularization, increase pancreatic β-cell proliferation, and avoid allograft rejection in islet transplantation. Taking advantage of the recent progress in gene therapy, genetically modified MSCs can further enhance and expand the therapeutic benefit of primary MSCs while retaining their stem-cell-like properties. This review aims to gain a thorough understanding of the current obstacles to successful islet transplantation and discusses the potential role of primary MSCs before or after genetic modification in islet transplantation.