Dysfunction of immune responses has been identified to involve in the pathogenesis of various neurodegenerative diseases. Abnormal activation of glia cells and/or infiltration of peripheral adaptive immune cells always sustains neuroinflammation and the disease progression. Obviously, the regulation of neuroinflammation has become a potential therapeutic strategy against neurodegenerative diseases. Mesenchymal stem cells (MSCs) exhibit complex interactions with various immune cells including T cells, macrophages and especially resident glia cells in the central nervous system. In response to tissue injury signals, MSCs adopt specific phenotype to suppress or promote immune responses depending on the inflammatory microenvironment they reside. Therefore, manipulation of MSCs may hold great potentials to improve MSC-based therapy on neurodegenerative diseases. Here we review MSC-mediated immunomodulation in cell therapy of neurodegenerative diseases, providing fundamental information for guiding appropriate applications of MSCs in clinical settings.