The understanding of cellular sources of kidney regeneration has rapidly evolved in the last decade. It is now believed that regeneration occurs predominantly from cells that reside within the injured kidney, with minimal contribution from extra-renal cells. We now know that improved kidney regeneration seen following exogenous administration of stem cells occur predominantly by noncellular paracrine mechanisms. Of all extra-renal stem cells, mesenchymal stem cells (MSC) are the most promising stem cell type for treating kidney diseases. There is an ongoing clinical trial evaluating safety and efficacy of MSC in treating acute kidney injury (AKI). Results of this trial are expected to bring use of MSC closer to the clinical realm. An improved understanding of the small molecules that facilitate kidney regeneration and are secreted by MSC will likely result in the development of new therapies for treating AKI. Identification of adult stem cell markers will result in improved understanding of pathophysiology of kidney diseases and could lead to the development of new cellular therapies. Directed differentiation of stem cells into desired cell types such as erythropoietin producing cells will allow selective replacement of lost kidney function. Cell-based therapies for patients with chronic kidney disease are presently in proof-of-principle stage and are expected to evolve in the coming years with improved understanding of stem cell biology. Technological advancement in cellular therapy is expected to provide improved therapeutic options for patients with kidney diseases in the near future.