Type 1 diabetes mellitus (T1DM) is an autoimmune disease characterized by lack of insulin and irreversible destruction of islet beta cells. In order to alleviate the symptoms, lifelong exogenous insulin administration has been the primary treatment of T1DM. In recent years, as a novel promising therapy, the transplantation of mesenchymal stem cells (MSCs) with or without pancreatic islets has achieved great therapeutic effects in animal models due to their multipotency along with their secretion of cytokines, angiogenic factors and immunomodulatory substances. There is plenty of evidence showing that MSCs can delay T1DM onset, reverse hyperglycemia after onset and increase insulin production. To date, the immunoregulation and immunosuppression of MSCs have been widely proved but the exact mechanisms are still not clear enough. Therefore, in this review, we mainly discuss the immunologic mechanism of MSCs in moderating the immune response of T1DM.