Acute-on-chronic liver failure (ACLF) is a critical illness with high mortality, and current therapeutic approaches still have certain limitations. In recent years, mesenchymal stem cells (MSCs) have attracted extensive attention in the treatment of ACLF owing to their properties including immunomodulation, anti-inflammation and tissue repair. This article reviews the research progress of MSC therapy for ACLF, with emphasis on its mechanisms of action, clinical applications of MSCs from different sources, combination therapeutic strategies, and safety profiles. It also analyzes the problems and challenges in clinical translation and outlines future research directions, so as to provide a relatively comprehensive reference for basic research and clinical application of MSCs in ACLF treatment.