Mesenchymal stem cells (MSCs) are on the cusp of regenerative medicine due to their differentiation capacity, favorable culture conditions, ability to be manipulated in vitro, and strong immunomodulatory activity. Recent studies indicate that the pleiotropic effects of MSCs, especially their immunomodulatory potential, can be largely attributed to paracrine factors. Exosomes, vesicles that are 30-150 nanometers in diameter that function in cell-cell communication, are one of the key paracrine effectors. MSC-derived exosomes are enriched with therapeutic miRNAs, mRNAs, cytokines, lipids, and growth factors. Emerging evidences support the compelling possibility of using MSC-derived exosomes as a new form of therapy for treating several different kinds of disease such as heart, kidney, immune diseases, neural injuries, and neurodegenerative disease. This review provides a summary of current knowledge and discusses engineering of MSC-derived exosomes for their use in translational medicine.