Improved stem cell-derived pancreatic islet (SC-islet) differentiation protocols robustly generate insulin-secreting β cells from patient induced pluripotent stem cells (iPSCs). These advances are enabling in vitro disease modeling studies and the development of an autologous diabetes cell replacement therapy. SC-islet technology elucidates key features of human pancreas development and diabetes disease progression through the generation of pancreatic progenitors, endocrine progenitors, and β cells derived from diabetic and nondiabetic iPSCs. Combining disease modeling with gene editing and next-generation sequencing reveals the impact of diabetes-causing mutations and diabetic phenotypes on multiple islet cell types. In addition, the supply of SC-islets, containing β and other islet cell types, is unlimited, presenting an opportunity for personalized medicine and overcoming several disadvantages posed by donor islets. This review highlights relevant studies involving iPSC-β cells and progenitors, encompassing new conclusions involving cells from patients with diabetes and the therapeutic potential of iPSC-β cells.