The prevalence of osteoarthritis (OA), a degenerative disorder of joints, has substantially increased in recent years. Its key pathogenic hallmarks include articular cartilage destruction, synovium inflammation, and bone remodeling. However, treatment outcomes are unsatisfactory. Until recently, common therapy methods, such as analgesic and anti-inflammatory treatments, were aimed to treat symptoms that cannot be radically cured. Mesenchymal stem cells (MSCs), i.e., mesoderm non-hematopoietic cells separated from bone marrow, adipose tissue, umbilical cord blood, etc., have been intensively explored as an emerging technique for the treatment of OA over the last few decades. According to existing research, MSCs may limit cartilage degradation in OA by interfering with cellular immunity and secreting a number of active chemicals. This study aimed to examine the potential mechanism of MSCs in the treatment of OA and conduct a thorough review of both preclinical and clinical data.