Four decades after the first isolation and characterization of clonogenic bone marrow stromal cells or mesenchymal stem cells (MSC) in the laboratory of Dr. Alexander Friedenstien, the therapeutic application of their progeny following ex vivo expansion are only now starting to be realized in the clinic. The multipotency, paracrine effects, and immune-modulatory properties of MSC present them as an ideal stem cell candidate for tissue engineering and regenerative medicine. In recent years it has come to light that MSC encompass plasticity that extends beyond the conventional bone, adipose, cartilage, and other skeletal structures, and has expanded to the differentiation of liver, kidney, muscle, skin, neural, and cardiac cell lineages. This review will specifically focus on the skeletal regenerative capacity of bone marrow derived MSC alone or in combination with growth factors, biocompatible scaffolds, and following genetic modification.