Mesenchymal stromal (stem) cells (MSCs) continue to be a strong area of focus for academic- and industry-based researchers who share the goal of expanding their therapeutic use for diverse inflammatory and immune-mediated diseases. Recently, there has been an accelerated rate of scientific publication, clinical trial activity, and commercialisation in the field. This has included the reporting of exciting new developments in four areas that will be of key importance to future successful use of MSC-based therapies in large numbers of patients: (a) fundamental biology of the primary cells in bone marrow and other tissues that give rise to MSCs in culture. (b) Mechanisms by which MSCs modulate immune and inflammatory responses in vivo. (c) Insights into MSC kinetics, safety, and efficacy in relevant animal disease models. (d) Isolation, definition, and clinical trial-based testing of human MSCs by biomedical companies and academic medical centers. Despite this progress, it remains unclear whether MSCs will enter mainstream therapeutic practice as a frequently used alternative to pharmacotherapy or surgical/radiological procedures in the foreseeable future. In this review, we summarize some of the most significant new developments for each of the four areas that contribute to the process of translating MSC research to the clinical arena. In the context of this recent progress, we discuss key challenges and specific knowledge gaps which, if not addressed in a coordinated fashion, may hinder the creation of robust “translational pipelines” for consolidating the status of MSC-based therapies.