Osteoarthritis (OA) is a degenerative and inflammatory joint disease that affects the cartilage, subchondral bone, and joint tissues. Although current drug therapies can provide a degree of symptomatic relief from pain, they fail to prevent joint damage. Mesenchymal stem/stromal cells (MSCs) have generated significant interest in terms of medical applications because they exert their therapeutic properties by secretion of bioactive factors that have potent immunomodulatory, antiapoptotic, antifibrotic, and anti-inflammatory effects. However, intra-articular injection of MSCs has major limitations including cell death upon injection and massive leakage from the injection site. Encapsulation of MSCs has therefore been developed as a way to overcome these limitations and to deliver therapeutic bioactive factors in several pathologies. In this review, we first briefly highlight the main therapeutic properties of MSCs and their applications in OA treatment. We then focus on MSC encapsulation and the current advances this strategy offers for the treatment of OA.