Stem cells have fascinated the scientific and clinical communities for over a century. Despite the controversy that surrounds this field, it is clear that stem cells have the potential to revolutionize medicine. However, a number of significant hurdles still stand in the way of the realization of this potential. Chiefly among these are safety concerns, differentiation efficiency and overcoming immune rejection. Here we review current progress made in this field to optimize the safe use of stem cells with particular emphasis on prospective interventions to deal with challenges generated by immune rejection.