Mesenchymal stem cells (MSCs) are one of a few stem cell types to be applied in clinical practice as therapeutic agents for immunomodulation and ischemic tissue repair. In addition to their multipotent differentiation potential, a strong paracrine capacity has been proposed as the principal mechanism that contributes to tissue repair. Apart from cytokine/chemokine secretion, MSCs also display a strong capacity for mitochondrial transfer and microvesicle (exosomes) secretion in response to injury with subsequent promotion of tissue regeneration. These unique properties of MSCs make them an invaluable cell type to repair damaged tissues/organs. Although MSCs offer great promise in the treatment of degenerative diseases and inflammatory disorders, there are still many challenges to overcome prior to their widespread clinical application. Particularly, their in-depth paracrine mechanisms remain a matter for debate and exploration. This review will highlight the discovery of the paracrine mechanism of MSCs, regulation of the paracrine biology of MSCs, important paracrine factors of MSCs in modulation of tissue repair, exosome and mitochondrial transfer for tissue repair, and the future perspective for MSC-based therapy.