Mesenchymal stem cells are a promising tool in regenerative medicine, and their functions can be enhanced through genetic modification. Recent advances in genetic engineering provide several methods that enable gene delivery to mesenchymal stem cells. However, it remains to be decided whether genetic modification of mesenchymal stem cells by vectors carrying reporter or therapeutic genes leads to adverse effects on morphology, phenotypic profiles, and viability of transplanted cells. In this regard, we focus on the description of genetic modification methods of mesenchymal stem cells, their effectiveness, and the impact on phenotype/cell behavior/proliferation and the differentiation ability of these cells in vitro and in vivo. Furthermore, we compare the main effects of genetically modified mesenchymal stem cells with native mesenchymal stem cells when applied in the therapy of neurological diseases.