A single dose of smart insulin will travel inside the body and release the needed amount, replacing series of blood tests and injections each day.
So far, this technology shows promise in lab tests performed on mice.
The study is published in journal PNAS.
Study authors plan to start human trials soon, but experts warn that it is a matter of years before such treatments are available to patients.
People with type 1 diabetes either do not make or cannot use the insulin they have, so they rely on insulin injections to maintain a healthy state. Without insulin injections, the blood sugar would reach dangerous levels.
Injections of insulin however pose the danger of causing the blood sugar to drop too low, so type 1 diabetes patients must check the blood glucose level and make sure it is within the right zone.
Several types of blood sugar control mechanisms are in development, but all are triggered when blood sugar gets too high and turn off when normal levels are reached.
Dr Danny Chou from the Massachusetts Institute of Technology has been testing a new type of insulin which is a modified version of the regular and long-acting insulin.
Posessing an extra set of molecules that allow it to attach to proteins that circulate in the bloodstream, the smart insulin is in the off mode implicitly. When blood sugar rises however, the smart insulin turns on, and glucose attaches to smart insulin.
Dr Chou said: “My goal is to make life easier and safer for diabetics. This is an important advance in insulin therapy.”
Dr Richard Elliott of Diabetes UK said: “Years of further research and clinical trials will be needed to find out if a similar drug could be used safely and effectively by people with diabetes.”