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In this review we explore stem cell function in wounds that are resistant to healing, such as burn injuries and diabetic wounds. Diabetic ulcers are of interest due to their remarkable resistance to heal; severe thermal burns are addressed due to critical need for effective therapies for the prevention shock and improvement in scarring. Cell-based therapy utilizing mesenchymal stem cells (MSCs), also known as mesenchymal stromal cells, are currently being investigated as a therapeutic avenue for both chronic diabetic ulcers and severe thermal burns. The clinical utility of stem cells, in particular MSCs, in caring for these types of injuries is primarily based on repairing and replacing cellular substrates, attenuation of inflammation, increasing angiogenesis, and enhancing migration of reparative cells. MSCs are sought after due to their unique ability to initiate different wound-healing programs, depending on the environmental milieu. Thus, this review aims to highlight the properties of MSCs, including their characterization, immunogenicity, and function in the context of dermal repair and regeneration in severe burns and diabetic wounds. Additionally, relevant clinical and pre-clinical studies illustrating the impact of allogeneic and autologous sources of MSCs on therapeutic efficacy are reviewed. Insight into the properties of MSCs and the dramatic host-to-MSC interactions within these pathological states may lead to the development of effective strategies for improving outcomes in impaired wounds.