Most recent evidence suggests that the process of tissue repair is driven by stem-like cells that reside in multiple tissues but are replenished by precursor cells from bone marrow. Among the candidates for the reparative cells are the adult stem cells from bone marrow referred to as either mesenchymal stem cells or marrow stromal cells (MSCs). We recently found that after MSCs were replated at very low densities to generate single-cell-derived colonies, they did not exit a prolonged lag period until they synthesized and secreted considerable quantities of Dickkopf-1, an inhibitor of the canonical Wnt signaling pathway. We also found that when the cells were cocultured with heat-shocked pulmonary epithelial cells, they differentiated into epithelial cells. Most of the MSCs differentiated without evidence of cell fusion but up to one-quarter underwent cell fusion with the epithelial cells. A few also underwent nuclear fusion. The results are consistent with the interesting possibility that MSCs and similar cells repair tissue injury by three different mechanisms: creation of a milieu that enhances regeneration of endogenous cells, transdifferentiation, and perhaps cell fusion.