Stem cells have been identified in a number of mammalian tissues (e.g. bone marrow, muscle, gut, skin, and neural tissues). Until recently, it was generally believed that the differentiation potential of a mammalian somatic stem cell is restricted to one tissue only, as in the case of hematopoietic stem cells differentiating into hematopoietic cells. In this sense, somatic stem cells are limited in their differentiation potential. Several lines of evidence now challenge the idea of unilateral development. New reports show mammalian somatic stem cells can, in the course of regeneration, repopulate heterologous cell systems and therefore possess a surprisingly broad spectrum of differentiation potential. Thus, mammalian stem cells are apparently capable of fate changes between stem cell systems, although the mechanisms leading to such changes are unclear. Mechanistic models for fate changes have been proposed in Drosophila, specifically for transdetermination of imaginal discs. Imaginal discs of the larva are the primordia of the adult exoskeleton and appendages, for example, legs, and antennae. Transplantation experiments of imaginal discs have shown that discs are determined for their disc identity. Transdetermination in Drosophila refers to cases when, after regenerative cell divisions, imaginal disc cells change from one state of determination to another, initiating a pathway of differentiation leading to structures other than those corresponding to the initial state or determination; for example, an antennal imaginal disc transdetermines to a leg imaginal disc. A fate change is thus possible in both mammalian somatic stem cells and Drosophila imaginal discs following transplantation and subsequent proliferation. Here we summarize and compare observations made in such cases of stem cell and imaginal disc differentiation.