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Bronchopulmonary dysplasia (BPD), a major complication of premature birth, still lacks safe and effective treatment. Mesenchymal stem cells (MSCs) have been proven to ameliorate critical aspects of the BPD pathogenesis. MSCs seem to exert therapeutic effects through the paracrine secretion of anti-inflammatory, antioxidant, antiapoptotic, trophic, and proangiogenic factors. Although these findings are promising, understanding the mechanism of action of MSCs and MSC manufacturing is still evolving. Several aspects can affect the efficacy of MSC therapy. Further research is required to optimize this potentially game-changing treatment but the translation of regenerative cell therapies for patients has begun.