Mesenchymal stromal cells (MSCs) are a non-homogeneous population of plastic-adherent cells which were initially isolated from post-natal bone marrow. They have the capacity to differentiate to multiple mesodermal lineages including bone, cartilage and adipose tissue. In stringent culture conditions, MSCs can also be induced to differentiate into different cell types of endoderm and neuroectoderm lineages. To date, no specific marker identifies MSCs, although a number of cell surface antigens have been described which enrich for MSCs. Mesenchymal stromal cells possess a number of properties which have generated considerable interest in diverse cellular therapeutic applications. The capacity of MSCs to differentiate into multiple different cell lineages has seen them actively explored for tissue repair, particularly in cardiac, orthopaedic and neurological applications. A large body of data indicates that MSCs possess immunomodulatory properties. Mesenchymal stromal cells are immunosuppressive, interacting with T lymphocytes, antigen presenting cells, B lymphocytes, and natural killer cells. In addition, they are immunoprivileged, allowing transplantation across allogeneic barriers. These immunomodulatory properties have seen infusion of MSCs for the treatment of steroid refractory graft versus host disease, a life threatening complication of haemopoietic cell transplantation, with promising results. Furthermore, these immune functions may lead to roles in the facilitation of engraftment, induction of tolerance and as therapy in autoimmune disease.