Inflammatory Bowel Disease (IBD) is a complicated disease that arises as a consequence of the interaction among environment, genetic factors and autoimmunity. Available therapeutic interventions with pharmacological or biological drugs have a very selective action. Mesenchymal stem cells (MSCs) have been emerging as a promising cellular therapy for the treatment of IBD due to their multifaceted functions. This article summarizes recent progress in both preclinical studies and clinical trials employing MSCs in IBD treatment. We justify the use of MSC-based cell therapy as a novel strategy for IBD, discuss the biological roles that MSCs play underlying their therapeutic effects focusing on their immune-suppressive effects, illustrate methods to improve MSCs for better repair, and pinpoint the obstacles hindering their success and the challenges to overcome before their ultimate application.