Graft-versus-host disease (GVHD) is a frequently encountered serious complication after allogeneic hematopoietic stem cell transplantation (allo-HSCT), it limits the success and widespread use of allo-HSCT. Mesenchymal stem cells (MSCs) are selected as ideal prophylactic and treatment means for GVHD during allo-HSCT due to their unique immunomodulatory and regenerative properties. Herein, the recent research progress about the prevantive and therapeutic effects of MSCs on GVHD and several issues related with the applications of MSC, including whether MSCs increasing risk of primary disease relapse and infection, impact of several clinical parameters on the clinical response to MSCs, and the prevantive and therapeutic effect of MSC-derived extracellular vesicles on GVHD are systematically reviewed.