Because of their immunomodulatory and engraftment-promoting properties, mesenchymal stromal cells (MSCs) have been tested in the clinical setting both to facilitate haematopoietic recovery and to treat steroid-resistant acute GVHD. More recently, experimental findings and clinical trials have focused on the ability of MSCs to home to damaged tissue and to produce paracrine factors with anti-inflammatory properties, resulting in functional recovery of the damaged tissue. The mechanisms through which MSCs exert their therapeutic potential rely on some key properties of the cells: the ability to secrete soluble factors capable of stimulating survival and recovery of injured cells; the capacity to home to sites of damage and the ability to blunt exaggerated immune responses. These fundamental properties are being tested within a novel therapeutic field defined as Regenerative Medicine. This review deals with recent research on the anti-inflammatory/reparative properties of MSCs and considers the possible mechanisms of function responsible for these effects. Moreover, current and potential clinical applications of MSC-based treatment strategies in the context of Regenerative Medicine are being discussed. Key issues such as optimal timing of MSC administration, cell dose and schedule of administration, advantages and disadvantages of using autologous or allogeneic cells are still open. Nonetheless, MSCs promise to represent a revolution for many severe or presently untreatable disorders.