A source of multipotent amniotic fluid/fetal stem cells (MAFSCs) is disclosed. MAFSC are of fetal origin and have a normal diploid karyotype. These cells are characterized by the following cell surface markers: SSEA3, SSEA4, Tra-1-60, Tra-1-81, Tra-2-54, HLA class I, CD13, CD44, CD49b, CD105 and are distinguished by the absence of the antigen markers CD34, CD45, and HLA Class II, but are distinguished from mouse embryonic stem cells in that these cells do not express the cell surface marker SSEA1. MAFSC express the stem cell transcription factor Oct-4. MAFSC cells can be propagated for an indefinite period of time in continuous culture in an undifferentiated state. The MAFSCs have the ability to differentiate in culture in a regulated manner, into three or more subphenotypes. Cells can then be differentiated into endodermal, mesodermal and ectodermal derived tissues in vitro and in vivo. A method for isolating, identifying, expanding and differentiating MAFSCs is disclosed.