The bone marrow-derived mesenchymal stem cells or mesenchymal stromal cells (MSCs), with pluripotent differentiation capacity, present an ideal source for cell transplantation or tissue engineering therapies, but exact understanding of regulating mechanism underling MSC proliferation and differentiation remains a critical issue in securing their safe and efficient clinical application. This review outlines current knowledge regarding MSC cell surface biomarkers and molecular mechanisms of MSC differentiation and proliferation with emphasis on Wnt/β-catenin signaling, Notch signaling pathway, bone morphogenesis proteins and various growth factors functioning in regulation of differentiation and proliferation of MSCs. Possible relation of oncogene and immunosuppressive activities of MSCs with tumorigenicity or tumor generation is also addressed for safe translational clinical application. Fast increase of MSC knowledge and techniques has led to some successful clinical trials and helped devising new tissue engineering therapies for bone and cartilage diseases that severely afflict human health. Production of adult MSC-derived functional neurons can further extend their therapeutic application in nerve injury and neurodegenerative diseases. It is promising that MSCs shall overcome ethical and immunorejection problems appeared in human embryonic stem cells, and specific molecular targeting manipulation may result in practical MSC therapy for personalized treatment of various diseases in the regeneration medicine.