Introduction: Type 1 diabetes mellitus (DM) causes marked skeletal muscle atrophy. Mesenchymal stromal cells (MSC) are an attractive therapy to avoid diabetic complications because of their ability to modify the microenvironment at sites of tissue injury. The objective of this study was to evaluate the effects of MSC transplantation on muscle adaptation caused by diabetes. Methods: DM was induced by streptozotocin (STZ), and the diabetic animals received systemic MSC transplantation. The von Frey test and footprint analysis were used to assess sensation and sensory motor performance, respectively. Tibialis anterior muscles were investigated by morphology; molecular markers atrogin-1/muscle RING-finger protein-1, nuclear factor κB/p38 mitogen-activated protein kinase, tumor necrosis-like weak inducer of apoptosis/fibroblast growth factor-inducible 14, myostatin, myogenic differentiation 1, and insulin-like growth factor 1 were also assessed. Results: MSC transplantation improved sensation and walking performance and also decreased muscle fibrosis in DM rats by modulating atrogenes but did not prevent muscle atrophy. Discussion: MSCs can reduce muscle and functional complications that result from type 1 DM in rats. Muscle Nerve 58: 583–591, 2018.