Adult bone marrow derived mesenchymal stem cells offer the potential to open a new frontier in medicine. Regenerative medicine aims to replace effete cells in a broad range of conditions associated with damaged cartilage, bone, muscle, tendon and ligament. However the normal process of immune rejection of mismatched allogeneic tissue would appear to prevent the realisation of such ambitions. In fact mesenchymal stem cells avoid allogeneic rejection in humans and in animal models. These finding are supported by in vitro co-culture studies. Three broad mechanisms contribute to this effect. Firstly, mesenchymal stem cells are hypoimmunogenic, often lacking MHC-II and costimulatory molecule expression. Secondly, these stem cells prevent T cell responses indirectly through modulation of dendritic cells and directly by disrupting NK as well as CD8+ and CD4+ T cell function. Thirdly, mesenchymal stem cells induce a suppressive local microenvironment through the production of prostaglandins and interleukin-10 as well as by the expression of indoleamine 2,3,-dioxygenase, which depletes the local milieu of tryptophan. Comparison is made to maternal tolerance of the fetal allograft, and contrasted with the immune evasion mechanisms of tumor cells. Mesenchymal stem cells are a highly regulated self-renewing population of cells with potent mechanisms to avoid allogeneic rejection.