Abstract Type 1 diabetes mellitus, an autoimmune disease, is characterized by self-destruction of pancreatic β-cells, thereby rendering the body deficient of insulin. The only current therapy available for type 1 diabetes is the daily administration of subcutaneous insulin. Pancreatic transplantation has been done in many patients, but the end result is not very satisfactory and, as usual, the patient is put on lifelong immunosuppresants. Thus, microencapsulation of insulin-secreting cells has recently been anticipated as a better alternative to painful insulin injections or pancreatic transplantation. Microencapsulation of cells has recently emerged as the next-generation cellular therapy model whereby the therapeutic cells are encapsulated inside polymeric scaffolds/structures. This is, thus, considered a protective cellular transplantation. The polymers selected should be bioinert with high biocompatibility and favor a bidirectional transport, i.e., inward movement of nutrients for the cell survival and the outward movement of the desired cellular therapeutic compound. Such an encapsulation also potentially protects the cells from the host immune response, which could be a boon in case of cellular transplantation. Currently, the most focused polymer for islets microencapsulation is alginate that is considered as one of the most biocompatible and immunologically inert biopolymers. For the patients who do not require islet transplantation, even taking insulin shots daily is a painful affair. Thus, nonparenteral delivery of insulin and other antidiabetic peptides/proteins presents a ray of hope for diabetic patients. Even though scientists around the globe have advanced a lot in this direction, we still need a great deal of scientific advancement to make this “possible” treatment into a “successful” therapy.