The REDDSTAR (Repair of Diabetic Damage by Stromal Cell Administration) study involves researchers from the university's centre for Vision and Vascular Science in the School of Medicine, Dentistry and Biomedical Sciences.
A condition called Diabetic Retinopathy puts at risk the sight of those living with the disease.
High blood sugar causes blood vessels in the eye to become blocked or to leak. The failed blood flow harms the retina, leading to vision impairment. If left untreated, it can lead to blindness.
In the new study, scientists isolate stem cells from donors, expand them in a laboratory setting and re-deliver them to a patient where they help to repair the blood vessels in the eye.
The research focuses on specific adult stem-cells derived from bone-marrow, and developing ways to grow them.
They will be tested in several preclinical models of diabetic complications at centres in Belfast, Galway, Munich, Berlin and Porto before human trials take place in Denmark.
Professor Alan Stitt, the centre's director and lead scientist for the project, explained the ground breaking project.
"This new research project is one of several regenerative medicine approaches ongoing in the centre.
"The approach is quite simple: we plan to isolate a very defined population of stem cells and then deliver them to sites in the body that have been damaged by diabetes. In the case of some patients with diabetes, they may gain enormous benefit from stem cell-mediated repair of damaged blood vessels in their retina."
He added: "This is the first step towards an exciting new therapy in an area where it is desperately needed."
Prof Stitt said procedures currently available deal with the latter stages of the condition Diabetic Retinopathy.
"Most of the procedures that are available are laser based, for example, and they are very effective at the late stages of diabetic retinopathy. But, they are pretty destructive because they cause burns to the retina.
"There are other therapies where we can have injections that are put directly into the eye and they show benefit - but again, they are very very late stage, what we're talking about is actually preventing the disease at a much earlier stage for patients."