Stem cells are the body's raw materials — cells from which all other cells with specialized functions are generated. Under the right conditions in the body or a laboratory, stem cells divide to form more cells called daughter cells.These daughter cells either become new stem cells (self-renewal) or become specialized cells (differentiation) with a more specific function, such as blood cells, brain cells, heart muscle cells or bone cells. No other cell in the body has the natural ability to generate new cell types.