The use of stem cells has opened new prospects for the treatment of orthopaedic conditions characterized by large bone defects. However, many issues still exist to which answers are needed before routine, large-scale application becomes possible. Bone marrow stromal cells (MSC), which are clonogenic, multipotential precursors present in the bone marrow stroma, are generally employed for bone regeneration. Stem cells with multilineage differentiation similar to MSC have also been demonstrated in adipose tissue, peripheral blood, umbilical cord and amniotic fluid. Each source presents its own advantages and drawbacks. Unfortunately, no unique surface antigen is expressed by MSC, and this hampers simple MSC enrichment from heterogeneous populations. MSC are identified through a combination of physical, morphological and functional assays. Different in vitro and in vivo models have been described for the research on bone stem cells. These models should predict the in vivo bone healing capacity of MSC and if the induced osteogenesis is similar to the physiological one. Although stem cells offer an exciting possibility of a renewable source of cells and tissues for replacement, orthopaedic applications often represent case reports whereas controlled randomized trials are still lacking. Further biological aspects of bone stem cells should be elucidated and a general consensus on the best models, protocols and proper use of scaffolds and growth factors should be achieved.