We have examined the effects of induced autologous stem cells on blood sugar levels in a rabbit model of type 1 diabetes. Rabbit skin fibroblasts were induced to dedifferentiate into multipotent stem cells, and were transplanted into the treatment group via the pancreatic artery. After the fibroblasts had been induced for 72 h, some of them became multipotent stem cells. Four weeks after cell transplantation, blood glucose levels of the induced stem cell treatment group were significantly lower. The plasma insulin and plasma C-peptide levels of the treated group were significantly increased (P < 0.05). The shape and number of islets was different. In the control group, induced cell treatment group and non-induced cell treatment group. In the control group, islet β-cell nucleoli were obvious, and cell volumes were larger with more abundant cytoplasm. The rough endoplasmic reticulum was well-developed and a large number of secretory granules could be seen within the cytoplasm. In the induced cell treatment group, islet β cells were scattered, and their nuclei were oval and slightly irregular in shape. The cytoplasm of these cells contained a nearly normal number of secretory granules. In the non-induced cell treatment group, islet β-cells were atrophied and cell volumes were reduced. Cytoplasmic endocrine granules were significantly reduced or absent. In conclusion, treatment with induced multipotent stem cells can reduce blood sugar levels, improve islet cell function, and repair damaged pancreas in a rabbit model of type 1 diabetes.