There are several characteristics of stem cells that make them unique in comparison with other mammalian cells. First, they exist as unspecialized cells lacking tissue-specific characteristics and they maintain this undifferentiated phenotype until exposed to appropriate signals. Second, they have the capacity for extensive self-renewal. Third, under the influence of local biological signals they can differentiate into specialized cells with a phenotype fully distinct from that of the precursor. Mesenchymal stem cells in the bone marrow apparently conform to this definition. These cells, as their name implies, are the precursors of cells of mesenchymal lineage, including cartilage, bone, fat, muscle, and tendon. They are easily isolated from bone marrow and adipose tissue and from several other sources. At this point we have an incomplete understanding of the regulation of differentiation, commitment, and plasticity of the mesenchymal cell population isolated from marrow. We can identify several of the signals that activate the cells to differentiate along specific cell pathways and we can describe the phenotype of the fully differentiated cells, but we understand little of the intermediate steps. In addition, we know nothing about the reversibility of these pathways or the ability of differentiated cells to revert to a stem cell phenotype. Nor do we understand transdifferentiation or the ability of cells to differentiate horizontally from one lineage to another. Furthermore, there is little clarity surrounding the niche, or tissue-specific microenvironment, in which the cells reside. Despite the lack of understanding of these cells and their natural history, it is clear that they have therapeutic potential in a broad variety of clinical applications. There are many disease targets for which mesenchymal stem cell therapy is being assessed in both preclinical and clinical studies. This article assesses our current understanding of the natural history of mesenchymal cell populations in marrow and other tissues, their control, proliferation, and differentiation, and attempts to assess accurately the status of their therapeutic evaluation in different diseases.