Tendon/ligament injuries are very common in sports and other rigorous activities. Tendons regenerate and repair slowly and inefficiently in vivo after injury. The limited ability of tendon to self-repair and the general inefficiencies of current treatment regimes have hastened the motivation to develop tissue-engineering strategies for tissue repair. Of particular interest in recent years has been the use of adult mesenchymal stem cells (MSCs) to regenerate functional tendons and ligaments. Different sources of MSCs have been studied for their effects on tendon repair. However, ectopic bone and tumour formation has been reported in some special circumstances after transplantation of MSCs. The induction of MSCs to differentiate into tendon-forming cells in vitro prior to transplantation is a possible approach to avoid ectopic bone and tumour formation while promoting tendon repair. While there are reports about the factors that might promote tenogenic differentiation, the study of tenogenic differentiation is hampered by the lack of definitive biomarkers for tendons. This review aims to summarize the cell sources currently used for tendon repair as well as their advantages and limitations. Factors affecting tenogenic differentiation were summarized. Molecular markers currently used for assessing tenogenic differentiation or neotendon formation are summarized and their advantages and limitations are commented upon. Finally, further directions for promoting and assessing tenogenic differentiation of stem cells for tendon repair are discussed. Copyright © 2011 John Wiley & Sons, Ltd.