Mesenchymal stem cells (MSCs) have great potential as a source of cells for cell-based therapy because of their ability for self-renewal and differentiation into functional cells. Moreover, matrix metalloproteinases (MMPs) have a critical role in the differentiation of MSCs into different lineages. MSCs also interact with exogenous MMPs at their surface, and regulate the pericellular localization of MMP activities. The fate of MSCs is regulated by specific MMPs associated with a key cell lineage. Recent reports suggest the integration of MMPs in the differentiation, angiogenesis, proliferation, and migration of MSCs. These interactions are not fully understood and warrant further investigation, especially for their application as therapeutic tools to treat different diseases. Therefore, overexpression of a single MMP or tissue-specific inhibitor of metalloproteinase in MSCs may promote transdifferentiation into a specific cell lineage, which can be used for the treatment of some diseases. In this review, we critically discuss the identification of various MMPs and the signaling pathways that affect the differentiation, migration, angiogenesis, and proliferation of MSCs.