Numerous publications have investigated stem-cell biology and the possible therapeutic use of stem cells in a wide range of injuries and diseases. This interest has been fueled by recent reports suggesting that mesenchymal stem cells can show unorthodox plasticity, their being able to transdifferentiate into cells of different lineages, such as neuronal phenotypes. This capability has obvious implications for their potential application in tissue engineering and tissue regeneration. The peripheral nervous system has an inherent capacity for regeneration, but this is limited and not matched by the level of reinnervation of target organs, with a resulting loss of functional recovery. Several approaches have been attempted in order to overcome this deficiency, and transplant of cultured Schwann cells into bioengineered conduits has been shown to improve regeneration. An alternative may be the use of stem-cell technology, whereby cultured and differentiated stem cells can be transplanted to the site of injury in order to promote enhanced regeneration. The present review discusses the use of stem cells applied to the repair of peripheral nerve injury and their role in the regeneration process.