Kidney transplantation is the best treatment for end-stage renal disease, but its implementation is limited by organ shortage and immune rejection. Side effects of current immunosuppressive drugs, such as nephrotoxicity, opportunistic infection, and tumorigenic potential, influence long-term graft outcomes. In recent years, continued research and subsequent discoveries concerning the properties and potential utilization of mesenchymal stem cells (MSCs) have aroused considerable interest and expectations. Biological characteristics of MSCs, including multi-lineage differentiation, homing potential, paracrine effect and immunomodulation, have opened new horizons for applications in kidney transplantation. However, many studies have shown that the biological activity of MSCs depends on internal inflammatory conditions, and the safety and efficacy of the clinical application of MSCs remain controversial. This review summarizes the findings of a large number of studies and aims to provide an objective viewpoint based on a comprehensive analysis of the presently established benefits and obstacles of implementing MSC-based therapy in kidney transplantation, and to promote its clinical translation.