In the last 10 years, mesenchymal stem cells (MSCs) have emerged as a therapeutic approach to regenerative medicine, cancer, autoimmune diseases, and many more due to their potential to differentiate into various tissues, to repair damaged tissues and organs, and also for their immunomodulatory properties. Findings in vitro and in vivo have demonstrated immune regulatory function of MSCs and have facilitated their application in clinical trials, such as those of autoimmune diseases and chronic inflammatory diseases. There has been an increasing interest in the role of MSCs in allogeneic hematopoietic stem cell transplantation (HSCT), including hematopoietic stem cell engraftment and the prevention and treatment of graft-versus-host disease (GVHD), and their therapeutic potential has been reported in numerous clinical trials. Although the safety of clinical application of MSCs is established, further modifications to improve their efficacy are required. In this review, we summarize advances in the potential use of MSCs in HSCT. In addition, we discuss their use in clinical trials of the treatment of GVHD following HSCT, the immunomodulatory capacity of MSCs, and their regenerative and therapeutic potential in the field of HSCT.