The reported evidence of neurodegeneration in multiple sclerosis (MS) may explain the lack of efficacy of the currently used immunomodulating modalities and the irreversible axonal damage, which results in accumulating disability. To date, efforts for neuroprotective treatments have not been successful in clinical studies in other CNS diseases. Therefore, for MS, the use of stem cells may provide a logical solution, since these cells can migrate locally into the areas of white-matter lesions (plaques) and have the potential to support local neurogenesis and rebuilding of the affected myelin. This is achieved both by support of the resident CNS stem cell repertoire and by differentiation of the transplanted cells into neurons and myelin-producing cells (oligodendrocytes). Stem cells were also shown to possess immunomodulating properties, inducing systemic and local suppression of the myelin-targeting autoimmune lymphocytes. Several types of stem cells (embryonic and adult) have been described and extensively studied in animal models of CNS diseases and the various models of MS (experimental autoimmune encephalomyelitis [EAE]). In this review, we summarize the experience with the use of different types of stem cells in CNS disease models, focusing on the models of EAE and describe the advantages and disadvantages of each stem cell type for future clinical applications in MS.