The stem cells isolated from amniotic fluid present an exciting possible contribution to the field of regenerative medicine and amniotic fluid-derived stem (AFS) cells have significant potential for research and therapeutic applications. AFS cells are multipotent, showing the ability to differentiate into cell types from all three embryonic germ layers. They express both embryonic and adult stem cell markers, expand extensively without feeder cells, double in 36 h, and are not tumorigenic. The AFS cells can be maintained for over 250 population doublings and preserve their telomere length and a normal karyotype. They differentiate easily into specific cell lineages and do not require human embryo tissue for their isolation, thus avoiding the current controversies associated with the use of human embryonic stem (ES) cells. The discovery of the AFS cells has been recent, and a great deal of work remains to be performed on the characterization and use of these cells. This review describes the various differentiated lineages that AFS cells can form and the future of these promising new stem cells in regenerative medicine research.