Parkinson's disease and Alzheimer's disease are the most common neurodegenerative diseases in the elderly population. Given that age is the most important risk factor in these diseases, the number of patients is expected to rise dramatically in the coming years. Therefore, an effective therapy for these diseases is highly sought. Current treatment brings only temporary symptomatic relief and does not result in halting the progression of these diseases. The increasing knowledge on the molecular mechanisms that underlie these diseases enables the design of novel therapies, targeted at degenerating neurons by creating an optimal regenerative cellular environment. Here, we review the progress made in the field of cell-replacement and gene-therapy strategies. New developments in the application of embryonic stem cells and adult neuronal progenitors are discussed. We also discuss the use of genetically engineered cells in neuronal rescuing strategies that have recently advanced into the clinic. The first trials for the treatment of Alzheimer's disease and Parkinson's disease with this approach are ongoing.