Mesenchymal stem cells (MSCs) are the most popular among the adult stem cells in tissue engineering and regenerative medicine. Since their discovery and functional characterization in the late 1960s and early 1970s, MSCs or MSC-like cells have been obtained from various mesodermal and non-mesodermal tissues, although majority of the therapeutic applications involved bone marrow-derived MSCs. Based on its mesenchymal origin, it was predicted earlier that MSCs only can differentiate into mesengenic lineages like bone, cartilage, fat or muscle. However, varied isolation and cell culturing methods identified subsets of MSCs in the bone marrow which not only differentiated into mesenchymal lineages, but also into ectodermal and endodermal derivatives. Although, true pluripotent status is yet to be established, MSCs have been successfully used in bone and cartilage regeneration in osteoporotic fracture and arthritis, respectively, and in the repair of cardiac tissue following myocardial infarction. Immunosuppressive properties of MSCs extend utility of MSCs to reduce complications of graft versus host disease and rheumatoid arthritis. Homing of MSCs to sites of tissue injury, including tumor, is well established. In addition to their ability in tissue regeneration, MSCs can be genetically engineered ex vivo for delivery of therapeutic molecule(s) to the sites of injury or tumorigenesis as cell therapy vehicles. MSCs tend to lose surface receptors for trafficking and have been reported to develop sarcoma in long-term culture. In this article, we reviewed the current status of MSCs with special emphasis to therapeutic application in bone-related diseases. J. Cell. Biochem. 111: 249–257, 2010. © 2010 Wiley-Liss, Inc.