Osteoarthritis (OA) is a widespread clinical disease characterized by cartilage degeneration in middle-aged and elderly people. Currently, there is no effective treatment for OA apart from total joint replacement in advanced stages. Mesenchymal stem cells (MSCs) are a type of adult stem cell with diverse differentiation capabilities and immunomodulatory potentials. MSCs are known to effectively regulate the cartilage microenvironment, promote cartilage regeneration, and alleviate OA symptoms. As a result, they are promising sources of cells for OA therapy. Recent studies have revealed the presence of resident MSCs in synovial fluid, synovial membrane, and articular cartilage, which can be collected as knee joint-derived MSCs (KJD-MSC). Several preclinical and clinical studies have demonstrated that KJD-MSCs have great potential for OA treatment, whether applied alone, in combination with biomaterials, or as exocrine MSCs. In this article, we will review the characteristics of MSCs in the joints, including their cytological characteristics, such as proliferation, cartilage differentiation, and immunomodulatory abilities, as well as the biological function of MSC exosomes. We will also discuss the use of tissue engineering in OA treatment and introduce the concept of a new generation of stem cell-based tissue engineering therapy, including the use of engineering, gene therapy, and gene editing techniques to create KJD-MSCs or KJD-MSC derivative exosomes with improved functionality and targeted delivery. These advances aim to maximize the efficiency of cartilage tissue engineering and provide new strategies to overcome the bottleneck of OA therapy. STATEMENT OF SIGNIFICANCE: This research will provide new insights into the medicinal benefit of Joint resident Mesenchymal Stem Cells (MSCs), specifically on its cartilage tissue engineering ability. Through this review, the community will further realize promoting joint resident mesenchymal stem cells, especially cartilage progenitor/MSC-like progenitor cells (CPSC), as a preventive measure against osteoarthritis and cartilage injury. People and medical institutions may also consider cartilage derived MSC as an alternative approach against cartilage degeneration. Moreover, the discussion presented in this study will convey valuable information for future research that will explore the medicinal benefits of cartilage derived MSC.