Bronchopulmonary dysplasia (BPD) is the chronic lung disease of prematurity mainly affecting preterm infants that are born at 24-28 weeks of gestation. Surfactant therapy, antenatal steroids and incremental improvements in perinatal care have modified the pattern of injury and allowed survival of ever more immature infants, but there is still no specific treatment for BPD. As a consequence, this disorder remains the most common complication of extreme prematurity. Arrested alveolar growth and disrupted vasculogenesis, the histological hallmarks of BPD, may persist beyond childhood and lead to chronic lung diseases in adults. Recent advances in our understanding of stem cells and their potential to repair damaged organs offer the possibility for cell-based treatment for intractable diseases. This review summarizes basic concepts of stem cell biology and discusses the recent advances and challenges of stem cell-based therapies for lung diseases, with a particular focus on BPD. Copyright © 2011 S. Karger AG, Basel.