Mesenchymal stem cells are a heterogeneous population of fibroblast-like stromal cells that have been isolated from the bone marrow and a number of organs and tissues including the kidney. They have multipotent and self-renewing properties and can differentiate into cells of the mesodermal lineage. Following their administration in vivo, mesenchymal stem cells migrate to damaged kidney tissue where they produce an array of anti-inflammatory cytokines and chemokines that can alter the course of injury. Mesenchymal stem cells are thought to elicit repair through paracrine and/or endocrine mechanisms that modulate the immune response resulting in tissue repair and cellular replacement. This review will discuss the features of mesenchymal stem cells and the factors they release that protect against kidney injury; the mechanisms of homing and engraftment to sites of inflammation; and further elucidate the immunomodulatory effect of mesenchymal stem cells and their ability to alter macrophage phenotype in a setting of kidney damage and repair.