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Catholic teaching has no moral difficulties with research on stem cells derived from adult stem cells or fetal cord blood. The ethical problem comes with embryonic stem cells since their genesis involves the destruction of a human embryo. However, there seems to be significant promise of health benefits from such research. Although Catholic teaching does not permit any destruction of human embryos, the question remains whether researchers in a Catholic institution, or any researchers opposed to destruction of human embryos, could participate in research on cultured embryonic stem cells, or whether a Catholic institution could use any therapy that ultimately results from such research. This position paper examines how such research could be conducted legitimately in a Catholic institution by using an ethical analysis involving a narrative context, the nature of the moral act, and the principle of material cooperation, along with references to significant ethical assessments. It also offers tentative guidelines that could be used by a Catholic institution in implementing such research.