The tremendous capacity of bone to regenerate is indicative of the presence of stem cells with the capability, by definition, to self-renew as well as to give rise to daughter cells. These primitive progenitors, termed mesenchymal stem cells or bone marrow stromal stem cells, exist postnatally, and are multipotent with the ability to generate cartilage, bone, muscle, tendon, ligament, and fat. Given the demographic challenge of an ageing population, the development of strategies to exploit the potential of stem cells to augment bone formation to replace or restore the function of traumatized, diseased, or degenerated bone is a major clinical and socioeconomic need. Owing to the developmental plasticity of mesenchymal stem cells, there is great interest in their application to replace damaged tissues. Combined with modern advances in gene therapy and tissue engineering, they have the potential to improve the quality of life for many. Critical in the development of this field will be an understanding of the phenotype, plasticity, and potentiality of these cells and the tempering of patients' expectations driven by commercial and media hype to match current laboratory and clinical observations.