Stem cell populations are found in most adult tissues and, in general, their differentiation potential may reflect the local cell population. Hematopoietic, epidermal, mesenchymal, neural and hepatic stem cells have been described. It may be that, in the adult, these cells are the reservoirs of reparative cells that are mobilized following injury and migrate to the wound site where, in cooperation with local cells, they participate in the repair response. Mesenchymal stem cells, isolated from the bone marrow, have the capacity to differentiate into cells of connective tissues. Some striking examples of the therapeutic use of MSCs have been reported recently in applications such as coronary artery disease, spinal cord injury, Parkinson's Disease, and liver regeneration. In orthopaedic medicine, MSC therapy has been applied in bone and cartilage repair and in the treatment of osteoarthritis. The question of the host response to implanted MSCs is critical as these cells are being evaluated in clinical applications. There are several aspects to the implanted cell-host interaction that need to be addressed as we attempt to understand the mechanisms underlying stem cell therapies. These are (1) the host immune response to implanted cells, (2) the homing mechanisms that guide delivered cells to a site of injury, and (3) differentiation of implanted cells under the influence of local signals.