Stem cells have emerged as a promising therapeutic approach for ischemic heart failure, with multiple preclinical and clinical trials demonstrating encouraging outcomes. However, limitations and challenges encountered during clinical trials or follow-up periods hinder stem cell therapy's clinical translation for heart failure. In this review, we will elaborate on the applications of stem cell-based therapy, the main subtypes and fundamental properties of stem cells, and the mechanisms by which stem cells exert their effects in ischemic heart failure, such as remuscularization, paracrine effects, autocrine effects, and endocrine-like effects. We will also demonstrate and explain the extensive clinical trials of stem cell therapy in ischemic heart failure, focusing on safety, efficacy, and primary and secondary outcome measures. To improve transplanted stem cells' viability and retention rates, we will discuss various delivery routes and advanced biomaterials used to encapsulate stem cells, such as injectable hydrogels, cardiac patches, and cell sheets. Several challenges severely obstruct the clinical translation of stem cell therapy for ischemic heart failure, including immunological rejection, post-transplantation hypoxia, inflammatory reactions, the maturity of transplanted stem cells, and cost. Finally, we will focus on the prospects of stem cell-based therapy for ischemic heart failure, emphasizing the ongoing need for further research to address existing challenges and establish clearer avenues toward clinical application.