Multipotent mesenchymal stromal or stem cells (MSCs) are likely to be agents of connective tissue homeostasis and repair. Because the hallmark of osteoarthritis (OA) is degeneration and failure to repair connective tissues it is compelling to think that these cells have a role to play in OA. Indeed, MSCs have been implicated in the pathogenesis of OA and, in turn, progression of the disease has been shown to be therapeutically modulated by MSCs. This review discusses current knowledge on the potential of both marrow-and local joint-derived MSCs in OA, the mode of action of the cells, and possible effects of the osteoarthritic niche on the function of MSCs. The use of stem cells for repair of isolated cartilage lesions and strategies for modulation of OA using local cell delivery are discussed as well as therapeutic options for the future to recruit and appropriately activate endogenous progenitors and/or locally systemically administered MSCs in the early stages of the disease. The use of gene therapy protocols, particularly as they pertain to modulation of inflammation associated with the osteoarthritic niche, offer an additional option in the treatment of this chronic disease. In summary, elucidation of the etiology of OA and development of technologies to detect early disease, allied to an increased understanding of the role MSCs in aging and OA, should lead to more targeted and efficacious treatments for this debilitating chronic disease in the future.