Embryonic stem cells of the mammalian blastocyst give rise to all the tissue lineages that begin to emerge at gastrulation. They are pluripotent cells and can be propagated in vitro without loss of pluripotency. Many adult tissues harbor cells that do not complete their differentiation program. These cells serve as self-renewing stem cells whose normal fate is to regenerate site-specific tissue, in response to either physiological cell turnover or damage inflicted by injury or disease. Neural, muscle, and bone marrow stem cells possess developmental potency far greater than their normal lineage-restricted fate. The understanding of the biology of stem cells is leading us into an era of regenerative medicine. The growth potential and pluripotency of embryonic stem cells and the developmental plasticity of adult stem cells, particularly those of bone marrow, make them potentially useful for replacing tissues, via transplantation or construction of bioartificial tissues, that either do not regenerate naturally or are damaged beyond their natural capability for regeneration. In addition to these two ways of replacing tissue, a third strategy of regenerative medicine is to stimulate regeneration in vivo from resident stem cells. Before these approaches become clinical reality, however, a number of basic research issues must be resolved, including the revision of our concept of a regeneration-competent cell.