Alzheimers disease (AD) is the most common neurodegenerative disease affecting millions of people in the world. Cognitive impairments such as progressive memory loss are devastating manifestations from this disease. Current pharmacological treatment has limited efficacy and only provides symptomatic relief without long-term cure. As a result, cell-replacement therapy using stem cells is an emerging potential treatment to AD. In the last decade, there have been animal trials using stem cells to treat and modulate cognitive impairment in AD models via three different mechanisms - replacing the damaged or dead cholinergic neurons; protecting neurons by reducing toxic amyloid protein aggregates or insoluble tau neurofibrillary tangles and promoting neurogenesis in hippocampus by neurotrophic secretions from stem cells. All of the trials showed promising results and improved our understandings about the mechanism of dementia in AD. With the continued improvement in safety profile of stem cell therapy and the creation of a better animal AD model in which to test them, it is feasible that stem cells could be trialled in humans for AD treatment in the next 5-10 years. © 2013 The Author 2013. Published by Oxford University Press.