Cnidarians are phylogenetically basal members of the animal kingdom (>600 million years old). Together with plants they share some remarkable features that cannot be found in higher animals. Cnidarians and plants exhibit an almost unlimited regeneration capacity and immortality. Immortality can be ascribed to the asexual mode of reproduction that requires cells with an unlimited self-renewal capacity. We propose that the basic properties of animal stem cells are tightly linked to this archaic mode of reproduction. The cnidarian stem cells can give rise to a number of differentiated cell types including neuronal and germ cells. The genomes of Hydra and Nematostella, representatives of two major cnidarian classes indicate a surprising complexity of both genomes, which is in the range of vertebrates. Recent work indicates that highly conserved signalling pathways control Hydra stem cell differentiation. Furthermore, the availability of genomic resources and novel technologies provide approaches to analyse these cells in vivo. Studies of stem cells in cnidarians will therefore open important insights into the basic mechanisms of stem cell biology. Their critical phylogenetic position at the base of the metazoan branch in the tree of life makes them an important link in unravelling the common mechanisms of stem cell biology between animals and plants.