Introduction Neurological disorders are routinely characterized by loss of cells in response to an injury or a progressive insult. Stem cells could therefore be useful to treat these disorders. Sources of data Pubmed searches of recent literature. Areas of agreement Stem cells exhibit proliferative capacity making them ideally suited for replacing dying cells. However, instead of cell replacement therapy stem cell transplants frequently appear to work via neurotrophic factor release, immunomodulation and upregulation of endogenous stem cells. Areas of controversy and areas timely for developing research Many questions remain with respect to the use of stem cells as a therapy, the answers to which will vary depending on the disorder to be treated and mode of action. Whereas the potential tumorigenic capability of stem cells is a concern, most studies do not support this notion. Further determination of the optimal cell type, and whether to perform allogeneic or autologous transplants warrant investigation before the full potential of stem cells can be realized. In addition, the use of stem cells to develop disease models should not be overlooked.