Osteoarthritis (OA) has traditionally been known as a “wear and tear” disease, which is mainly characterized by the degradation of articular cartilage and changes in the subchondral bone. Despite the fact that OA is often thought of as a degenerative disease, the catabolic products of the cartilage matrix often promote inflammation by activating immune cells. Current OA treatment focuses on symptomatic treatment, with a primary focus on pain management, which does not promote cartilage regeneration or attenuate joint inflammation. Since articular cartilage have no ability to regenerate, thus regeneration of the tissue is one of the key targets of modern treatments for OA. Cell-based therapies are among the new therapeutic strategies for OA. Mesenchymal stem cells (MSCs) have been extensively researched as potential therapeutic agents in cell-based therapy of OA due to their ability to differentiate into chondrocytes and their immunomodulatory properties that can facilitate cartilage repair and regeneration. In this review, we emphasized current knowledge and future perspectives on the use of MSCs by targeting their regeneration potential and immunomodulatory effects in the treatment of OA.