Mesenchymal stem cells (MSCs) possess unique immunomodulatory properties, making them valuable for treating tissue/organ damage caused by chronic inflammation or autoimmune disorders. Despite their potential in conditions like graft-versus-host disease (GvHD) and allergies, challenges remain before widespread clinical use. MSCs can differentiate into various cell types and regulate immune responses by suppressing T-cell proliferation, regulating regulatory T cells, and inhibiting dendritic cell activation. They also modulate B-cell and NK-cell functions. Pluripotent stem cell-derived MSCs show similar immunomodulatory effects and may offer advantages in terms of cell survival and engraftment. MSCs are derived from various tissues, including bone marrow, adipose tissue, and umbilical cord blood. They have been used in preclinical and clinical studies for conditions such as asthma, colitis, and multiple sclerosis. MSCs reduce inflammation, suppress immune responses, and promote tissue repair. However, clinical trials have shown mixed results, with some studies indicating efficacy while others report no significant benefit. Factors such as MSC source, preparation, and delivery methods can influence outcomes. MSCs can be modified with cytokines or drugs to enhance their therapeutic effects. However, challenges remain in standardizing their production, ensuring consistency, and minimizing adverse effects. Human pluripotent stem cell-derived MSCs offer potential advantages, including better proliferation and regenerative capacity, and are less sensitive to pro-inflammatory signals. These cells can be produced under good manufacturing practices (GMP) and may serve as a reliable source for clinical immunomodulation therapy. Future research should focus on improving MSC therapy through better understanding of their mechanisms, standardizing protocols, and enhancing quality control. MSCs have the potential to revolutionize immunomodulation therapy, but further studies are needed to ensure their safety and efficacy.Mesenchymal stem cells (MSCs) possess unique immunomodulatory properties, making them valuable for treating tissue/organ damage caused by chronic inflammation or autoimmune disorders. Despite their potential in conditions like graft-versus-host disease (GvHD) and allergies, challenges remain before widespread clinical use. MSCs can differentiate into various cell types and regulate immune responses by suppressing T-cell proliferation, regulating regulatory T cells, and inhibiting dendritic cell activation. They also modulate B-cell and NK-cell functions. Pluripotent stem cell-derived MSCs show similar immunomodulatory effects and may offer advantages in terms of cell survival and engraftment. MSCs are derived from various tissues, including bone marrow, adipose tissue, and umbilical cord blood. They have been used in preclinical and clinical studies for conditions such as asthma, colitis, and multiple sclerosis. MSCs reduce inflammation, suppress immune responses, and promote tissue repair. However, clinical trials have shown mixed results, with some studies indicating efficacy while others report no significant benefit. Factors such as MSC source, preparation, and delivery methods can influence outcomes. MSCs can be modified with cytokines or drugs to enhance their therapeutic effects. However, challenges remain in standardizing their production, ensuring consistency, and minimizing adverse effects. Human pluripotent stem cell-derived MSCs offer potential advantages, including better proliferation and regenerative capacity, and are less sensitive to pro-inflammatory signals. These cells can be produced under good manufacturing practices (GMP) and may serve as a reliable source for clinical immunomodulation therapy. Future research should focus on improving MSC therapy through better understanding of their mechanisms, standardizing protocols, and enhancing quality control. MSCs have the potential to revolutionize immunomodulation therapy, but further studies are needed to ensure their safety and efficacy.