The rapid evolution of experimental data has acknowledged the critical relevance of immune biology in stem cell research. It appears that efficient transfer of stem cells to patients requires robust analyses of the immune properties as well as the responses of the stem cells to immune mediators. This review discusses the biology of adult human mesenchymal stem cells (MSCs) in the context of immunology. MSCs are pluripotent, self-renewing cells with the potential for tissue regeneration, for example the repair of bone, cartilage, tendon, ligament, skeletal muscle, and cardiac muscle. MSCs have also been shown to transdifferentiate into cells of ectodermal origin, such as neurons. MSCs are located in perfused areas of adult bone marrow, whereas hematopoietic stem cells are located in poorly perfused areas of the same organ. MSCs show bimodal, i.e. anti-inflammatory and immune-enhancing, immune responses. MSCs also regulate immune responses such as the regulation of antibody production by B cells, alterations in T cell subtypes, and immune tolerance of allogeneic transplants. MSCs also have the potential for gene delivery. This review explores the diverse clinical potential for MSCs and discusses the limitations and advantages of their immunomodulatory properties.