Osteonecrosis of the femoral head (ONFH) is a common and disabling joint disease. Although there is no clear consensus on the complex pathogenic mechanism of ONFH, trauma, abuse of glucocorticoids, and alcoholism are implicated in its etiology. The therapeutic strategies are still limited, and the clinical outcomes are not satisfactory. Mesenchymal stem cells (MSCs) have been shown to exert a positive impact on ONFH in preclinical experiments and clinical trials. The beneficial properties of MSCs are due, at least in part, to their ability to home to the injured tissue, secretion of paracrine signaling molecules, and multipotentiality. Nevertheless, the regenerative capacity of transplanted cells is impaired by the hostile environment of necrotic tissue in vivo, limiting their clinical efficacy. Recently, genetic engineering has been introduced as an attractive strategy to improve the regenerative properties of MSCs in the treatment of early-stage ONFH. This review summarizes the function of several genes used in the engineering of MSCs for the treatment of ONFH. Further, current challenges and future perspectives of genetic manipulation of MSCs are discussed. The notion of genetically engineered MSCs functioning as a ''factory'' that can produce a significant amount of multipotent and patient-specific therapeutic product is emphasized.