Scientific and clinical research interest in mesenchymal stem cells (MSCs) has increased exponentially since the identification of MSCs in the bone marrow. It is now recognized that MSCs possess the in vitro characteristics of stem cells with the abilities to proliferate, symmetrically divide, and produce multi-lineage mesodermal derivatives, making MSCs attractive candidates for use in potential cellular therapies. Furthermore, MSCs can be relatively easily isolated and expanded in culture with low tumorigenicity and teratoma formation, and have been reported to display immunomodulatory properties that may be advantageous in clinical transplantation. Discovery of the ability of MSCs to differentiate into cells of non-mesodermal tissues, particularly neural cells, has also raised the possibility of utilizing MSCs in regenerative and reparative therapies for neurological disorders. However, a number of hurdles remain to be resolved, including conflicting findings concerning the capacity of MSCs to suppress immune responses and contribute to multiple tissue lineages, highlighting the need for a greater understanding of mechanisms underlying the observed phenomena. In this review we will discuss: (1) recent advances in our understanding of MSC plasticity/transdifferentiation and immunomodulatory properties; (2) evidence for cell-based therapies, in particular MSC-based therapies for Parkinson's disease; and (3) current challenges and potential strategies for the utilization of MSCs in the treatment of Parkinson's disease.