The capacity of embryonic stem (ES) cells for virtually unlimited self renewal and differentiation has opened up the prospect of widespread applications in biomedical research and regenerative medicine. The use of these cells would overcome the problems of donor tissue shortage and implant rejection, if the cells are made immunocompatible with the recipient. Since the derivation in 1998 of human ES cell lines from preimplantation embryos, considerable research is centered on their biology, on how differentiation can be encouraged toward particular cell lineages, and also on the means to enrich and purify derivative cell types. In addition, ES cells may be used as an in vitro system not only to study cell differentiation but also to evaluate the effects of new drugs and the identification of genes as potential therapeutic targets. This review will summarize what is known about animal and human ES cells with particular emphasis on their application in four animal models of human diseases. Present studies of mouse ES cell transplantation reveal encouraging results but also technical barriers that have to be overcome before clinical trials can be considered.