Osteoarthritis (OA), a chronic joint disease affecting over 500 million individuals globally, is characterized by the destruction of articular cartilage and joint inflammation. Conventional treatments are insufficient for repairing damaged joint tissue, necessitating novel therapeutic approaches. Mesenchymal stem cells (MSCs), with their potential for differentiation and self-renewal, hold great promise as a treatment for OA. However, challenges such as MSC viability and apoptosis in the ischemic joint environment hinder their therapeutic effectiveness. Hydrogels with biocompatibility and degradability offer a three-dimensional scaffold that support cell viability and differentiation, making them ideal for MSC delivery in OA treatment. This review discusses the pathological features of OA, the properties of MSCs, the challenges associated with MSC therapy, and methods for hydrogel preparation and functionalization. Furthermore, it highlights the advantages of hydrogel-based MSC delivery systems while providing insights into future research directions and the clinical potential of this approach.