Mesenchymal stem cells are heterogenous adult multipotent stromal cells that can be isolated from various sources including bone marrow, peripheral blood, umbilical cord blood, dental pulp, and adipose tissue. They have certain regenerative, anti-inflammatory, immunomodulatory, immunosuppressive, antimicrobial, and other properties that enable them to have several therapeutic and clinical applications including treatment of various autoimmune disorders; role in hematopoietic stem cell transplantation and regenerative medicine; treatment of skin, pulmonary and cardiovascular disorders; treatment of neurological and eye diseases; as well as treatment of various infections and their complications. Different factors including donor age, biological source, route of administration, and signaling pathways have an impact on the functions and consequently the clinical applications of mesenchymal stromal cells. The products of mesenchymal stem cells such as extracellular vesicles and exosomes reproduce the biological effects and most of the therapeutic actions of the parent stem cells. Genetic engineering and the use of specific mesenchymal stromal cell products have improved their clinical efficacy and decreased their adverse effects. However, despite the recent progress in the use of mesenchymal stem cells, the clinical application of these cells in the treatment of several diseases still faces real challenges that need to be resolved. The current status of mesenchymal stem cells and the controversies related to their clinical utilization in various disease conditions will be thoroughly discussed in this review.