Adult human mesenchymal stem cells (hMSCs) are the focus of a number of clinical applications. The advantage of hMSCs is that they are immuno-modulatory and versatile due to their secreted bioactive molecules that are anti-inflammatory and regenerative. These cells have the potential to orchestrate reparative processes in diseased or injured tissues. Much of the diversity and uniqueness of hMSCs is defined by their response to the milieu of injured tissue. hMSCs are sensitive to their site-specific microenvironment, and it is anticipated that they will deliver the bioactive agents in a site-specific manner quite different from the way pharmaceutical drugs work. This review highlights current concepts of such functions with a focus on the clinical utility of hMSCs in the treatment of lung diseases.