Many kinds of cells, including embryonic stem cells and tissue stem cells, have been considered candidates for transplantation therapy for neuro- and muscle-degenerative diseases. Bone marrow stromal cells (MSCs) also have great potential as therapeutic agents since they are easily isolated and can be expanded from patients without serious ethical or technical problems. Recently, new methods for the highly efficient and specific induction of functional neurons and skeletal muscle cells have been developed for MSCs. These induced cells were transplanted into animal models of stroke, Parkinson's disease and muscle degeneration, resulting in the successful integration of transplanted cells and improvement in the behavior of the transplanted animals. Here I describe the discovery of these induction systems and focus on the potential use of MSC-derived cells for 'auto-cell transplantation therapy' in neuro- and muscle-degenerative diseases.