Healing skin wounds with anatomic and functional integrity, especially under chronic pathological conditions, remain an enormous challenge. Due to their outstanding regenerative potential, mesenchymal stem cells (MSCs) have been explored in many studies to determine the healing ability for difficult-to-treat diseases. In this article, we review current animal studies and clinical trials of MSC-based therapy for chronic wounds, and discuss major challenges that confront future clinical applications. We found that a wealth of animal studies have revealed the versatile roles and the benefits of MSCs for chronic wound healing. MSC treatment results in enhanced angiogenesis, facilitated reepithelialization, improved granulation, and accelerated wound closure. There are some evidences of the transdifferentiation of MSCs into skin cells. However, the healing effect of MSCs depends primarily on their paracrine actions, which alleviate the harsh microenvironment of chronic wounds and regulate local cellular responses. Consistent with the findings of preclinical studies, some clinical trials have shown improved wound healing after transplantation of MSCs in chronic wounds, mainly lower extremity ulcers, pressure sores, and radiation burns. However, there are some limitations in these clinical trials, especially a small number of patients and imperfect methodology. Therefore, to better define the safety and efficiency of MSC-based wound therapy, large-scale controlled multicenter trials are needed in the future. In addition, to build a robust pool of clinical evidence, standardized protocols, especially the cultivation and quality control of MSCs, are recommended. Altogether, based on current data, MSC-based therapy represents a promising treatment option for chronic wounds. Impact statement Chronic wounds persist as a significant health care problem, particularly with increasing number of patients and the lack of efficient treatments. The main goal of this article is to provide an overview of current status of mesenchymal stem cell (MSC)-based therapy for chronic wounds. The roles of MSCs in skin wound healing, as revealed in a large number of animal studies, are detailed. A critical view is made on the clinical application of MSCs for lower extremity ulcers, pressure sores, and radiation burns. Main challenges that confront future clinical applications are discussed, which hopefully contribute to innovations in MSC-based wound treatment.