Stem cell-based approaches have received much hype as potential treatments for neurodegenerative disorders. Indeed, transplantation of stem cells or their derivatives in animal models of neurodegenerative diseases can improve function by replacing the lost neurons and glial cells and by mediating remyelination, trophic actions, and modulation of inflammation. Endogenous neural stem cells are also potential therapeutic targets because they produce neurons and glial cells in response to injury and could be affected by the degenerative process. As we discuss here, however, significant hurdles remain before these findings can be responsibly translated to novel therapies. In particular, we need to better understand the mechanisms of action of stem cells after transplantation and learn how to control stem cell proliferation, survival, migration, and differentiation in the pathological environment.