With common scientific themes and experimental strategies, stem cell biology is evolving into a recognizable discipline. Its clinical arm, regenerative medicine, is also gaining momentum-invigorated by the potential of stem cells to provide treatments for a host of medical conditions that are poorly served by drug therapy. But are the expectations for stem cell therapies realistic or overstated? In the past year, neurons, insulin-producing cells, and hematopoietic stem cells have been generated from embryonic stem cells or cultivated from somatic tissues of the adult. These cells have yielded modest and preliminary hints of functional reconstitution in animal models. Although encouraging, significant hurdles remain before the promise of stem cells will be realized in the clinic.