Aim/hypothesisThis study aimed to investigate the safety and efficacy of treatment with allogeneic Wharton’s jelly-derived mesenchymal stromal cells (MSCs) in recent-onset type 1 diabetes.MethodsA combined Phase I/II trial, composed of a dose escalation followed by a randomised double-blind placebo-controlled study in parallel design, was performed in which treatment with allogeneic MSCs produced as an advanced therapy medicinal product (ProTrans) was compared with placebo in adults with newly diagnosed type 1 diabetes. Inclusion criteria were a diagnosis of type 1 diabetes <2 years before enrolment, age 18–40 years and a fasting plasma C-peptide concentration >0.12 nmol/l. Randomisation was performed with a web-based randomisation system, with a randomisation code created prior to the start of the study. The randomisation was made in blocks, with participants randomised to ProTrans or placebo treatment. Randomisation envelopes were kept at the clinic in a locked room, with study staff opening the envelopes at the baseline visits. All participants and study personnel were blinded to group assignment. The study was conducted at Karolinska University Hospital, Stockholm, Sweden.ResultsThree participants were included in each dose cohort during the first part of the study. Fifteen participants were randomised in the second part of the study, with ten participants assigned to ProTrans treatment and five to placebo. All participants were analysed for the primary and secondary outcomes. No serious adverse events related to treatment were observed and, overall, few adverse events (mainly mild upper respiratory tract infections) were reported in the active treatment and placebo arms. The primary efficacy endpoint was defined as Δ-change in C-peptide AUC for a mixed meal tolerance test at 1 year following ProTrans/placebo infusion compared with baseline performance prior to treatment. C-peptide levels in placebo-treated individuals declined by 47%, whereas those in ProTrans-treated individuals declined by only 10% (p<0.05). Similarly, insulin requirements increased in placebo-treated individuals by a median of 10 U/day, whereas insulin needs of ProTrans-treated individuals did not change over the follow-up period of 12 months (p<0.05).Conclusions/interpretationThis study suggests that allogeneic Wharton’s jelly-derived MSCs (ProTrans) is a safe treatment for recent-onset type 1 diabetes, with the potential to preserve beta cell function.Trial registrationClinicalTrials.gov NCT03406585FundingThe sponsor of the clinical trial is NextCell Pharma AB, Stockholm, Sweden.Graphical AbstractSupplementary InformationThe online version of this article (10.1007/s00125-023-05934-3) contains peer-reviewed but unedited supplementary material.