Although advancements have been made with traditional therapies, the treatment of chronic nonhealing wounds still remains a tough challenge. In the past two decades, mesenchymal stem cell (MSC)-based therapy has emerged as a promising therapeutic strategy for nonhealing wounds because of their characteristics including self-renewal and a multidirectional differentiation ability and their easy collection and weak immunogenicity. There is a growing body of basic scientific studies that shed light on the functional mechanism of MSCs in modulating nonhealing wounds. Furthermore, critical advances have been achieved using MSC-based therapy in preclinical animal models as well as in clinics trials. In this present review, we summarize the mechanisms of MSCs and highlight the important preclinical and clinical trials of MSC therapy for nonhealing wounds. In particular, the combination of MSCs transplantation and tissue-engineered skin is addressed as a new strategy to optimize the delivery efficiency and therapeutic potential. Additionally, the current drawbacks of MSC therapy and the potential to further optimize the use of MSCs are implied.