There has been an increasing interest in stem cell applications and tissue engineering approaches in surgical practice to deal with damaged or lost tissue. Although there have been developments in almost all surgical disciplines, the greatest advances are being made in orthopaedics. This is due to many factors including the familiarity with bone marrow derived mesenchymal stem cells. Unfortunately significant hurdles remain to be overcome in many areas before tissue engineering becomes more routinely used in clinical practice. Stem cells have been identified in a number of adult tissues, albeit in small numbers. In addition to bone marrow, mesenchymal stem cells have been identified in a number of tissues including adipose tissue and fat pad. The mesenchymal stem cells are generally isolated from the tissue and expanded in culture. These cells are characterised or defined using a set of cell surface markers; mesenchymal stem cells are generally positive for CD44, CD90 and CD105, and are negative for haematopoetic markers CD34 and CD45, and the neurogenic marker CD56. In this paper the characterisation of stem cells is discussed followed by preliminary evidence suggesting that pericytes may be a candidate stem cell.