Mesenchymal stem cells (MSCs) can be readily isolated from a number of adult and fetal tissues, and have the capacity of expansion in vitro on a clinical scale. Bone marrow MSCs are able to differentiate into multiple cell lineages that resemble osteoblasts, chondrocytes, myoblasts, adipocytes, endothelial cells, neuron-like cells, cardiomyocytes and hepatocytes. Preclinical findings from animal experiments are promising and have shown that human multipotent MSCs may have considerable therapeutic potential in a wide variety of human diseases. Research into the role that MSCs play in the induction of tolerance in bone marrow and organ transplantation holds great for future therapeutic strategies. Clinical trials are underway to assess the safety, feasibility and efficacy of MSC transplantation in a variety of human diseases. Clinicians need to know the recent progress and rationale for performing these clinical studies. As such, this review focuses on the background of MSCs and medical research in this area, bridging bench and bedside applications. Conflicting preclinical results and published data from our laboratory are discussed.