In this paper, we describe an experimental model that allows evaluation of the full potential of stem cells under normal physiological conditions and in the absence of genetic or injury-induced dysfunction, thus serving as a valuable tool for the study of the mechanism(s) underlying stem cell differentiation. The fetal sheep model of human stem cell transplantation permits the robust formation of donor-derived tissue-specific cells in the absence of selective pressure given its unique characteristics: the preimmune status of the fetus allows donor stem cell engraftment without significant rejection and the existence of the naturally occurring migratory patterns in the fetus facilitates the widespread efficient distribution of donor stem cells throughout the body. The cells are then influenced by the stimulatory environment of the specific tissue or organ to undergo proliferation and directed differentiation. The versatility of this noninjury fetal model of human stem cell plasticity was demonstrated by revealing the differentiative potential of different populations of both human hematopoietic stem cells and human mesenchymal stem cells (MSC).