Many assumptions about the way cells behave are based on analyses of populations. However, it is now widely recognized that even apparently pure populations can display a remarkable level of heterogeneity. This is particularly true in stem cell biology where it hinders our understanding of normal development and the development of strategies for regenerative medicine. Over the past decade technologies facilitating gene expression analysis at the single cell level have become widespread, providing access to rare cell populations and insights into population structure and function. Here we review the contributions of single cell biology to understanding stem cell differentiation so far, both as a new methodology for defining cell types and a tool for understanding the complexities of cellular decision-making.