The recent derivation of human embryonic stem (ES) cell lines, together with results suggesting an unexpected degree of plasticity in later, seemingly more restricted, stem cells (so–called adult stem cells), have combined to focus attention on new opportunities for regenerative medicine, as well as for understanding basic aspects of embryonic development and diseases such as cancer. Many of the ideas that are now discussed have a long history and much has been underpinned by the earlier studies of teratocarcinomas, and their embryonal carcinoma (EC) stem cells, which present a malignant surrogate for the normal stem cells of the early embryo. Nevertheless, although the potential of EC and ES cells to differentiate into a wide range of tissues is now well attested, little is understood of the key regulatory mechanisms that control their differentiation. Apart from the intrinsic biological interest in elucidating these mechanisms, a clear understanding of the molecular process involved will be essential if the clinical potential of these cells is to be realized. The recent observations of stem–cell plasticity suggest that perhaps our current concepts about the operation of cell regulatory pathways are inadequate, and that new approaches for analysing complex regulatory networks will be essential.