Mesenchymal stem cells (MSC) are multipotent cells that differentiate into osteoblasts, myocytes, chondrocytes and adipocytes as well as insulin-producing cells. The mechanism underlying their in vivo differentiation is not clear and is thought to be caused by spontaneous cell fusion or factors present in the microenvironment. However, their ease of isolation, high 'ex-vivo' expansion potential and ability to differentiate into multiple lineages make them attractive tools for potential use in cell therapy. MSC have been isolated from several tissues, including bone/bone marrow, fat, Wharton's jelly, umbilical cord blood, placenta and pancreas. The 'immunosuppressive' property of human MSC makes them an important candidate for cellular therapy in allogeneic settings. Use of allogeneic MSC for repair of large defects may be an alternative to autologous and allogeneic tissue-grafting procedures. An allogeneic approach would enable MSC to be isolated from any donor, expanded and cryopreserved, providing a readily available source of progenitors for cell replacement therapy. Their immunomodulatory properties have raised the possibility of establishing allogeneic MSC banks for tissue regeneration. These facts are strongly reflected in the current exponential growth in stem cell research in the pharmaceutical and biotechnology communities. Current knowledge regarding the immunobiology and clinical application of MSC needs to be strengthened further to establish MSC as a safe and effective therapeutic tool in regenerative medicine. This paper discusses human MSC with particular reference to the expression of their surface markers, their role as immunomodulators and their multilineage differentiation potential and possible use in tissue regeneration and repair.