Mesenchymal stem cells (MSCs), or multipotent mesenchymal stromal cells as they are also known, have been identified in bone marrow as well as in other tissues of the joint, including adipose, synovium, periosteum, perichondrium, and cartilage. These cells are characterized by their phenotype and their ability to differentiate into three lineages: chondrocytes, osteoblasts and adipocytes. Importantly, MSCs also potently modulate immune responses, exhibit healing capacities, improve angiogenesis and prevent fibrosis. These properties might be explained at least in part by the trophic effects of MSCs through the secretion of a number of cytokines and growth factors. However, the mechanisms involved in the differentiation potential of MSCs, and their immunomodulatory and paracrine properties, are currently being extensively studied. These unique properties of MSCs confer on them the potential to be used for therapeutic applications in rheumatic diseases, including rheumatoid arthritis, osteoarthritis, genetic bone and cartilage disorders as well as bone metastasis.