Background: With the development of regenerative medicine and tissue engineering technology, almost all stem cell therapy is efficacious for the treatment of premature ovarian failure (POF) or premature ovarian insufficiency (POI) animal models, whereas little stem cell therapy has been practiced in clinical settings. The underlying molecular mechanism and safety of stem cell treatment in POI are not fully understood. In this study, we explored whether fetal mesenchymal stem cells (fMSCs) from the liver restore ovarian function and whether melatonin membrane receptor 1 (MT1) acts as a regulator for treating POI disease. Methods: We designed an in vivo model (chemotherapy-induced ovary damage) and an in vitro model (human ovarian granulosa cells (hGCs)) to understand the efficacy and molecular cues of fMSC treatment of POI. Follicle development was observed by H&E staining. The concentration of sex hormones in serum (E2, AMH, and FSH) and the concentration of oxidative and antioxidative metabolites and the enzymes MDA, SOD, CAT, LDH, GR, and GPx were measured by ELISA. Flow cytometry (FACS) was employed to detect the percentages of ROS and proliferation rates. mRNA and protein expression of antiapoptotic genes (SURVIVIN and BCL2), apoptotic genes (CASPASE-3 and CASPASE-9), and MT1 and its downstream genes (JNK1, PCNA, AMPK) were tested by qPCR and western blotting. MT1 siRNA and related antagonists were used to assess the mechanism. Results: fMSC treatment prevented cyclophosphamide (CTX)-induced follicle loss and recovered sex hormone levels. Additionally, fMSCs significantly decreased oxidative damage, increased oxidative protection, improved antiapoptotic effects, and inhibited apoptotic genes in vivo and in vitro. Furthermore, fMSCs also upregulated MT1, JNK1, PCNA, and AMPK at the mRNA and protein levels. With MT1 knockdown or antagonist treatment in normal hGCs, the protein expression of JNK1, PCNA, and AMPK and the percentage of proliferation were impaired. Conclusions: fMSCs might play a crucial role in mediating follicular development in the POI mouse model and stimulating the activity of POI hGCs by targeting MT1.