Via Facsimile and U.S. Mail
Mail Stop 6010


July 29, 2005


Ms. Judi Lum
Chief Financial Officer
StemCells, Inc.
3155 Porter Drive
Palo Alto, CA 94304

Re:	StemCells, Inc.
	Form 10-K for Fiscal Year Ended December 31, 2004
	Filed March 15, 2005
	File No.  000-19871

Dear Ms. Lum:

      We have limited our review of your filing to those issues we
have addressed in our comment.  Where indicated, we think you
should
revise your document in response to this comment.  If you
disagree,
we will consider your explanation as to why our comment is
inapplicable or a revision is unnecessary.  Please be as detailed
as
necessary in your explanation.

	Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects.  We welcome
any questions you may have about our comments or on any other
aspect
of our review.  Feel free to call us at the telephone numbers
listed
at the end of this letter.

Form 10-K for Fiscal Year Ended December 31, 2004

Item 7. Management`s Discussion and Analysis of Financial
Condition
and Results of Operations

Critical Accounting Policies




Wind-down and Exit Costs, page 31

1. We believe your disclosure regarding the wind-down and exit
costs
could be improved to better explain the judgments and
uncertainties
surrounding this estimate and the potential impact on your
financial
statements.  Accordingly, please revise MD&A to include the
following
information.

a. Discuss the key factors and assumptions used to arrive at
management`s best estimate of the exit cost reserve including the
lease obligations, the sublease income (contractual and
projected),
the period of time used for each location, and other significant
items.
b. Discuss the specific changes made to your assumptions in the
fiscal years presented that resulted in the re-evaluation to the
reserve and corresponding wind-down expense.
c. In addition include quantified and narrative disclosure of the
impact that reasonably likely changes in one or more of the
variables
would have on reported results, financial position and liquidity.


*    *    *    *

      Please amend your filing within 10 business days or tell us
when you will provide us with a response.  You may wish to provide
us
with marked copies of the amendment to expedite our review.
Please
furnish a cover letter with your amendment that keys your response
to
our comment.  Detailed cover letters greatly facilitate our
review.
Please file your letter on EDGAR under the form type label
CORRSEP.
Please understand that we may have additional comments after
reviewing your amendment and response to our comment.

	We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing to be certain that the
filing includes all information required under the Securities
Exchange Act of 1934 and that they have provided all information
investors require for an informed investment decision.  Since the
company and its management are in possession of all facts relating
to
a company`s disclosure, they are responsible for the accuracy and
adequacy of the disclosures they have made.

	In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:

* the company is responsible for the adequacy and accuracy of the
disclosure in the filing;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.

      In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comment on your filing.

      You may contact Dana Hartz, Staff Accountant, at (202) 551-
3648
or Joel Parker, Accounting Branch Chief, at (202) 551-3651 if you
have questions regarding the comments. In this regard, do not
hesitate to contact me, at (202) 551-3679.

								Sincerely,



								Jim B. Rosenberg
								Senior Assistant Chief
Accountant
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Ms. Judi Lum
StemCells, Inc.
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