As one of the UML’s main extension mechanisms, stereotypes play a crucial role in the UML’s ability to serve a wide and growing base of users. However, the precise meaning of stereotypes and their intended mode of use has never been entirely clear and has even generated significant debate among experts. Two basic ways of using UML stereotypes have been observed in practice: One to support the classification of classes as a means of emulating metamodel extensions, the other to support the classification of objects as a means of assigning them certain properties. In this paper we analyze these two recognized stereotype usage scenarios and explain the rationale for explicitly identifying a third form of usage scenario. We propose some notational concepts which could be used to explicitly distinguish the three usage scenarios and provide heuristics as to when each should be used. Finally, we conclude by proposing enhancements to the UML which could support all three forms cleanly and concisely.