Mesenchymal stem cells are multipotent progenitors able to differentiate into osteoblasts, chondrocytes and adipocytes. These cells also exhibit remarkable immune regulatory properties, which stimulated both in vitro and in vivo experimental studies to unravel the underlying mechanisms as well as extensive clinical applications. Here, we describe the effects of MSCs on immune cells and their application in animal models as well as in clinical trials of autoimmune diseases. It should be pointed out that, while the number of clinical applications is increasing steadily, results should be interpreted with caution, in order to avoid rising false expectations. Major issues conditioning clinical application are the heterogeneity of MSCs and their unpredictable behavior following therapeutic administration. However, increasing knowledge on the interaction between exogenous cell and host tissue, as well as some encouraging clinical observations suggest that the therapeutic applications of MSCs will be further expanded on firmer grounds in the near future.