Recent studies have shown that, despite stereotypical cleavage, annelids show the ability for embryonic regulation, including the formation of germline cells. However, the widest variety of regulative processes is presented in the postlarval development of annelids. The ability to regenerate, which is probably an ancestral feature, manifests itself variously among these animals. Some species are unable to regenerate lost segments. However, most species replace lost posterior body parts, many are able to reestablish missing head segments and structures, and some develop the entire body de novo even on the basis of one or two segments. Most of the regenerated structures are formed due to a set of undifferentiated cells arising from the division of dedifferentiated and/or stem cells. Moreover, the regeneration process often involves remodeling of survived body fragments and may thus be associated not only with local changes but also require a response at the level of the whole organism. In this review, we summarize many recent studies on the molecular and cellular mechanisms of regeneration in annelids. Special attention is paid to the regeneration of the digestive and nervous systems and integuments as well as to the involvement of stem and undifferentiated cells in the development of blastema and in replacing the lost gonads. Accumulation and analysis of recent findings about the diversity of cellular sources and mechanisms of annelid regeneration may shed light on the most evolutionarily conserved programs for maintaining regeneration ability and processes leading to the loss (limitation) of one of the ancestral features of animals.