Mesenchymal stem/stromal cells (MSCs) have become the focus of intense research effort over the past 10 years, in an effort to harness their regenerative and immune-modulating capacity for a variety of clinical conditions. In Acute Respiratory Distress Syndrome (ARDS), pre-clinical studies point towards a therapy that modulates multiple aspects of a complex disease process. Almost universally, these cells have demonstrated an immune modulating phenotype, balancing protective host responses with a reduction in damaging inflammation, while enhancing bacterial killing. MSCs also lead to more efficient tissue repair, and MSC-mediated lung tissue repair and regeneration after ARDS are some of the exciting clinical prospects. Recent investigation into the role of endogenous MSCs has led to new insights into MSC physiology and its role in regulating the immune system. However, significant deficits remain in our knowledge regarding the mechanisms of action of MSCs, their efficacy in relevant pre-clinical models, and their safety in critically ill patients. These gaps need to be addressed before the enormous therapeutic potential of stem cells for ALI/ARDS can be realized.