Vertebrates regenerate tissues in three ways: proliferation of cells that maintain some or all of their differentiated structure and function, redifferentiation of mature cells followed by proliferation and redifferentiation into the same cell type or transdetermination to another cell type, and activation of restricted lineage stem cells, which have the ability to transdetermine to different lineages under the appropriate conditions. The behavior of the cells during regeneration is regulated by growth factors and extracellular matrix molecules. Some non-regenerating tissues are now known to harbor stem cells which, though they form scar tissue in vivo, are capable of producing new tissue-specific cells in vitro, suggesting that the injury environment inhibits latent regenerative capacity. Regenerative medicine seeks to restore tissues via transplantation of stem cell derivatives, implantation of bioartificial tissues, or stimulation of regeneration in vivo. These approaches have been partly successful, but several research issues must be addressed before regenerative medicine becomes a clinical reality.