Mesenchymal stem cells (MSCs) were initially defined by their capacity to differentiate into connective tissue cell lineages and support hematopoiesis. More recently, MSCs have demonstrated some degree of therapeutic efficacy in a broad range of diseases including neurological and auto-immune disorders, stroke, diabetes, and chronic inflammatory conditions. An emerging paradigm suggests that MSCs alter the tissue microenvironment via paracrine signaling to induce angiogenesis, alter immune cell function, block inflammation, and stimulate growth of host cells to affect tissue repair. However, these activities appear at odds with the term "mesenchymal stem cell", which by definition implies a rare cell population that through a process of self-renewal yields progenitors that differentiate hierarchically into connective tissue cell types to maintain tissue homeostasis. Analysis of the MSC transcriptome via serial analysis of gene expression (SAGE) revealed that populations express a diverse array of proteins that are important for mesoderm specification but that also regulate various biochemical processes important in bone and marrow, such as angiogenesis, hematopoiesis, cell communication, and neural activities. Moreover, different classes of these regulatory proteins were found to be expressed within distinct sub populations of MSCs. Therefore, MSC populations appear to be more heterogeneous than initially envisions. Evidence is provided that this functional heterogeneity contributes significantly to the therapeutic effects of MSCs.