For over 10 years, bone marrow-derived endothelial progenitor cells (EPCs) have been studied as a novel biomarker to assess the severity of cardiovascular diseases, and as a potential new strategy in regenerative medicine. Cell-based therapy to stimulate postnatal vasculogenesis or to repair vascular integrity is being evaluated for cardiovascular diseases with excess morbidity and mortality, including ischemic heart disease, in-stent restenosis, pulmonary hypertension and peripheral arterial occlusive disease. Although clinical experience is still limited, observed effects appear modest compared with preclinical models. In this review, we will examine major hurdles to the effective use of EPCs, including our incomplete understanding of the characterization and dysfunctional phenotype of circulating EPCs in pathological conditions. Understanding the basic mechanisms of EPC dysfunction will be a prerequisite in enhancing their therapeutic potential.