Ownership Submission
FORM 3
 UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

INITIAL STATEMENT OF BENEFICIAL OWNERSHIP OF SECURITIES

Filed pursuant to Section 16(a) of the Securities Exchange Act of 1934, Section 17(a) of the Public Utility Holding Company Act of 1935 or Section 30(h) of the Investment Company Act of 1940
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(Print or Type Responses)
1. Name and Address of Reporting Person *
  OCONNELL DESMOND H JR
 2. Date of Event Requiring Statement (Month/Day/Year)
01/10/2007		 3. Issuer Name and Ticker or Trading Symbol
STEMCELLS INC [STEM]
(Last)
(First)
(Middle)
3155 PORTER DRIVE		 4. Relationship of Reporting Person(s) to Issuer
(Check all applicable)
__X__ Director _____ 10% Owner
_____ Officer (give title below) _____ Other (specify below)
5. If Amendment, Date Original Filed(Month/Day/Year)
01/10/2007
(Street)

PALO ALTO, CA 94304		 6. Individual or Joint/Group Filing(Check Applicable Line)
_X_ Form filed by One Reporting Person
___ Form filed by More than One Reporting Person
(City)
(State)
(Zip)
Table I - Non-Derivative Securities Beneficially Owned
1.Title of Security
(Instr. 4)		 2. Amount of Securities Beneficially Owned
(Instr. 4)		 3. Ownership Form: Direct (D) or Indirect (I)
(Instr. 5)		 4. Nature of Indirect Beneficial Ownership
(Instr. 5)
Common Stock 500
I
By Spouse (1)

Reminder: Report on a separate line for each class of securities beneficially owned directly or indirectly. SEC 1473 (7-02)
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Table II - Derivative Securities Beneficially Owned (e.g., puts, calls, warrants, options, convertible securities)
1. Title of Derivative Security
(Instr. 4)		 2. Date Exercisable and Expiration Date
(Month/Day/Year)		 3. Title and Amount of Securities Underlying Derivative Security
(Instr. 4)		 4. Conversion or Exercise Price of Derivative Security 5. Ownership Form of Derivative Security: Direct (D) or Indirect (I)
(Instr. 5)		 6. Nature of Indirect Beneficial Ownership
(Instr. 5)
Date Exercisable Expiration Date Title Amount or Number of Shares
Option to Purchase 01/09/2008(2) 01/09/2017 Common Stock 20,000 $ 3.43 (2) D  

Reporting Owners

Reporting Owner Name / Address Relationships
Director 10% Owner Officer Other
OCONNELL DESMOND H JR
3155 PORTER DRIVE
PALO ALTO, CA 94304		   X      

Signatures

Desmond H. O'Connell, Jr. by Iris Brest, Attorney-in-Fact 01/16/2007
**Signature of Reporting Person Date

Explanation of Responses:

* If the form is filed by more than one reporting person, see Instruction 5(b)(v).
** Intentional misstatements or omissions of facts constitute Federal Criminal Violations. See 18 U.S.C. 1001 and 15 U.S.C. 78ff(a).
(1) Reporting person disclaims beneficial ownership
(2) Non-employee directors receive an option for 20,000 shares of the Company's common stock on appointment to the Board of Directors. The option vests one third on each of the first three anniversaries of each such option, and has a strike price equal to the closing price of the stock on the date of appointment. Mr. O'Connell became a member of the Board on January 10, 2006; the closing price of the stock was $3.44 on that date.

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