Transplantation of mesenchymal stem cells (MSCs) has been recently studied in animal models, and in clinical trials of patients with fulminant hepatic failure, end-stage liver diseases and inherited metabolic disorders. Modulatory cytokines produced by MSCs can inhibit immunocyte proliferation and migration to the liver, thereby attenuating inflammatory injury and reducing hepatocyte apoptosis. In addition, MSCs play an important role in regressing liver fibrosis and in supporting the function, proliferation and differentiation of endogenous hepatocytes under appropriate conditions. Although remarkable progress has been achieved in basic and clinical MSC studies, optimal therapeutic regimens for the clinical application of MSCs, such as optimal doses, transplantation routine and interval period for transplantation, need to be elucidated in detail. Furthermore, the long-term safety and therapeutic efficacy of MSC transplantation should be evaluated in future clinical trials. This review summarizes our current understanding of the immunomodulatory effects of MSC therapies on human liver diseases.