Background: Type-1 diabetes (T1D) occurs following autoimmune-induced pancreatic beta cells death. Among several treatment modalities, mesenchymal stem cells (MSCs) transplantation is promising for autoimmune disorders due to immunomodulation, regeneration, and migration to damaged tissue upon systemic injection. This study assessed the safety and efficacy of intravenous injection of autologous bone marrow-derived MSCs in newly diagnosed T1D patients. Methods: After receiving informed consent, 21 patients who met the study criteria were enrolled and randomly assigned to receive either MSCs or placebo. Each patient in the experimental group received two doses of MSCs and was followed for at least one-year post-transplantation. Results: The results have shown that this transplantation is safe and significantly reduces the number of hypoglycemic episodes. MSCs transplantation improved glycated hemoglobin (HbA1c), shifted serum cytokine patterns from pro-inflammatory to anti-inflammatory, increased the number of regulatory T-cells in the peripheral blood, and improved quality of life. Early transplantation of MSCs significantly improved HbA1c and C-peptide levels and shifted pro-inflammatory cytokines to anti-inflammatory cytokines. Also, exercise combined with MSCs transplantation improved glycemic and immunologic indices. Conclusions: Taken together, autologous MSC transplantation is safe and effective, and its early transplantation is a promising treatment in newly diagnosed T1D children suffering from hypoglycemic episodes. Trial registration: This clinical trial was registered at the Iranian Registry of Clinical Trials (IRCT) with the identifier IRCT ID: IRCT2016070428786N1 registered on August 20, 2016 (Retrospectively registered) ( https://en.irct.ir/trial/23256 ) and at the U.S. National Institutes of Health (ClinicalTrials.gov) with the related identifier NCT04078308 registered on September 6, 2019 (Retrospectively registered). ( https://clinicaltrials.gov/ct2/show/NCT04078308 ).Keywords: Cell therapy; Immunomodulation; Mesenchymal stem cells; Randomized controlled trial; Regulatory T cells; Type 1 diabetes.