Stem cells have been isolated at all stages of development from the early developing embryo to the post-reproductive adult organism. However, the fetal environment is unique as it is the only time in ontogeny that there is migration of stem cells in large numbers into different organ compartments. While fetal neural and haemopoietic stem cells (HSC) have been well characterised, only recently have mesenchymal stem cells from the human fetus been isolated and evaluated. Our group have characterised in human fetal blood, liver and bone marrow a population of non-haemopoietic, non-endothelial cells with an immunophenotype similar to adult bone marrow-derived mesenchymal stem cells (MSC). These cells, human fetal mesenchymal stem cells (hfMSC), are true multipotent stem cells with greater self-renewal and differentiation capacity than their adult counterparts. They circulate in first trimester fetal blood and have been found to traffic into the maternal circulation, engrafting in bone marrow, where they remain microchimeric for decades after pregnancy. Though fetal microchimerism has been implicated in the pathogenesis of autoimmune disease, the biological role of hfMSC microchimerism is unknown. Potential downstream applications of hfMSC include their use as a target cell for non-invasive pre-natal diagnosis from maternal blood, and for fetal cellular and gene therapy. Using hfMSC in fetal therapy offers the theoretical advantages of avoidance of immune rejection, increased engraftment, and treatment before disease pathology sets in. Aside from allogeneic hfMSC in utero transplantation, the use of autologous hfMSC has been brought a step forward with the development of early blood sampling techniques, efficient viral transduction and clonal expansion. Work is ongoing to determine hfMSC fate post-transplantation in murine models of genetic disease. In this review we will examine what is known about hfMSC biology, as well as discussing areas for future research. The implications of hfMSC trafficking in pregnancy will be explored and the potential clinical applications of hfMSC in prenatal diagnosis and fetal therapy discussed.