Mesenchymal stem or stromal cells (MSCs) are multipotent cells that play a pivotal role in various phases of lung development and lung homeostasis, and potentially also lung regeneration. MSCs do not only self-renew and differentiate into renew tissues, but also have anti-inflammatory and paracrine properties to reduce damage and to support tissue regeneration, constituting a promising cell-based treatment strategy for the repair of damaged alveolar tissue in emphysema. This review discusses the current state of the art regarding the potential of MSCs for the treatment of emphysema. The optimism regarding this treatment strategy is supported by promising results from animal models. Still, there are considerable challenges before effective stem cell treatment can be realized in emphysema patients. It is difficult to draw definitive conclusions from the available animal studies, as different models, dosage protocols, administration routes, and sources of MSCs have been used with different measures of effectiveness. Moreover, the regrowth potential of differentiated tissues and organs differs between species. Essential questions about MSC engraftment, retention, and survival have not been sufficiently addressed in a systematic manner. Few human studies have investigated MSC treatment for chronic obstructive pulmonary disease, demonstrating short-term safety but no convincing benefits on clinical outcomes. Possible explanations for the lack of beneficial effects on clinical outcomes could be the source (bone marrow), route, dosage, frequency of administration, and delivery (lack of a bioactive scaffold). This review will provide a comprehensive overview of the (pre)clinical studies on MSC effects in emphysema and discuss the current challenges regarding the optimal use of MSCs for cell-based therapies.