Mesenchymal stem cells (MSCs) were initially identified by their capacity to differentiate into connective tissue cell types. In the past decade MSCs were also shown to exhibit unexpected plasticity, which was thought to account for their broad therapeutic efficacy in animal models of disease and human clinical trials. More recent evidence indicates that their capacity to alter the microenvironment via secretion of soluble factors contributes more significantly than their plasticity in effecting tissue repair. However, the production by MSCs of a diverse array of trophic factors is inconsistent with their designation as stem cells, which by definition lie at the apex of a hierarchy of cellular differentiation and lineage specification. Analysis of the MSC transcriptome has led to the identification of sub populations that express a variety of regulatory proteins that function in angiogenesis, hematopoiesis, neural activities, and immunity and defense. These activities reflect the varied functions of distinct stromal subtypes in marrow that play important roles in tissue homeostasis. Evidence is provided that the biochemical heterogeneity of these subpopulations contributes more significantly to the therapeutic potential of MSCs than their stem-like characteristics.