Increasing evidence suggests that stem cells have tremendous potential to facilitate repair of damaged tissue and to exert protective influences that limit the extent of damage. Their inherent capacity to respond to signals generated by damaged tissue, migrate to these regions and either replace dead tissue or deliver protection by secretion of specific growth hormones and protective factors, suggests that they might have unrivalled therapeutic potential in perinatal medicine. A further potential of stem cells is their use in gene repair strategies for genetic disorders; an application which is exceedingly interesting from a perinatal perspective. Because of the relatively small size of infants and their capacity for future growth, stem cell therapy could be more successful in newborns than in older children or adults. In practical terms, the placenta, with its large reservoir of fetal blood, offers the ideal source of autologous stem cells. This affords the opportunity for stem cells to be collected and used, either directly ex vivo or after in vitro modulation, both for disorders in the neonatal period and for those arising later in life. The organs most affected from tissue damage in the neonatal period are the brain and the lung. So far, the most promising application of stem cells might be in the treatment of neurological injury. In this review we discuss recent research findings with adult stem cell therapy and their potential use in perinatal medicine. Furthermore, specific animal models suitable to explore the patho-physiological mechanisms of stem cell transplantation after neurological injury will be discussed. This review gives an overview of basic science findings and their possible role for clinical application with regards to the therapeutic potential of stem cells in perinatal medicine. Medline was searched for journal selection in peer-reviewed journals with high impact scores, which were relevant to this topic. All articles were in English and the search was not limited by publication year. However, the oldest publication was dated 1988 (reference 1).