The adult stem/progenitor cells from bone marrow and other tissues referred to as mesenchymal stem cells or multipotent mesenchymal stromal cells (MSCs) display a significant therapeutic plasticity as reflected by their ability to enhance tissue repair and influence the immune response both in vitro and in vivo. In this review we will focus on the paradigmatic preclinical experience achieved testing MSCs in experimental autoimmune encephalomyelitis (EAE), a model for multiple sclerosis. We will emphasize how the paradigm changed over time from the original prediction that MSCs would enhance tissue repair through their transdifferentiation into somatic cells to the current paradigm that they can produce therapeutic benefits without engraftment into the injured tissues. The data will be reviewed in terms of the potentials of MSCs for therapy of autoimmune diseases.