Mesenchymal stem cells (MSCs) have become one of the most important cell sources for regenerative medicine. However, some mechanisms of MSC-based therapy are still not fully understood. The clinical outcome may be restricted by some MSC-related obstacles such as the low survival rate, differentiation into undesired lineages and malignant transformation. In recent years, with the emergence of nanotechnology, various types of multifunctional nanoparticles (NPs) have been designed, prepared and explored for bio-related applications. There is high potential of NPs in biomedical applications, attributed to the high capacity of cellular internalization in MSCs and their multiple functionalities. They can be used either as labeling agent to track MSCs for mechanism study or as gene/drug delivery carriers to regulate the cellular behavior and functions of MSCs. However, the application of NPs may be accompanied by some undesirable effects, as some NPs can induce cell death, inhibit cell proliferation or influence the differentiation of MSCs. Aiming to provide a comprehensive understanding of the interaction between NPs and MSCs, recent progress in the design and preparation of multifunctional NPs is summarized in this review, mechanisms of cellular internalization of the NPs are discussed, the main applications of multifunctional NPs in MSCs are highlighted and overview about cellular response of MSCs to different NPs is given. Future studies aiming on design and development of NPs with multifunctionality may open a new field of applying nanotechnology in stem cell-based therapy.