Abstract: Bone defects caused by factors such as developmental malformations, trauma, infection, tumor resection and failed joint replacement surgeries, represent a major challenge in clinical treatment. These defects lead to the loss of bone tissue or structural integrity and can result in various complications, causing multiple adverse effects on patients. Additionally, they often lead to psychological issues such as anxiety, significantly reducing quality of life. Recent studies have shown that mesenchymal stem cells (MSCs) exhibit great potential in the treatment of bone defects. These cells exert therapeutic effects through various mechanisms, including immune evasion, direct osteogenic differentiation, homing ability and paracrine activity, offering a promising new approach for bone defect treatment. Driven by the rapid development of novel biomaterials in recent years, a variety of innovative treatment strategies based on MSCs have emerged. MSC-based therapies for bone defects include standalone application, delivery via novel systems, combination with polymer scaffolds, genetic modification and preconditioning and cell-free therapies. This article reviews the fundamental characteristics of MSCs, their mechanisms of action in treating bone defects, current clinical research progress and the status of translational applications. Based on this, the prospects of MSC-based therapies are also discussed.