The use of mesenchymal stem cells (MSCs) in cartilage regeneration has gained significant attention in regenerative medicine. This paper reviews the molecular mechanisms underlying MSC-based cartilage regeneration and explores various therapeutic strategies to enhance the efficacy of MSCs in this context. MSCs exhibit multipotent capabilities and can differentiate into various cell lineages under specific microenvironmental cues. Chondrogenic differentiation, a complex process involving signaling pathways, transcription factors, and growth factors, plays a pivotal role in the successful regeneration of cartilage tissue. The chondrogenic differentiation of MSCs is tightly regulated by growth factors and signaling pathways such as TGF-β, BMP, Wnt/β-catenin, RhoA/ROCK, NOTCH, and IHH (Indian hedgehog). Understanding the intricate balance between these pathways is crucial for directing lineage-specific differentiation and preventing undesirable chondrocyte hypertrophy. Additionally, paracrine effects of MSCs, mediated by the secretion of bioactive factors, contribute significantly to immunomodulation, recruitment of endogenous stem cells, and maintenance of chondrocyte phenotype. Pre-treatment strategies utilized to potentiate MSCs, such as hypoxic conditions, low-intensity ultrasound, kartogenin treatment, and gene editing, are also discussed for their potential to enhance MSC survival, differentiation, and paracrine effects. In conclusion, this paper provides a comprehensive overview of the molecular mechanisms involved in MSC-based cartilage regeneration and outlines promising therapeutic strategies. The insights presented contribute to the ongoing efforts in optimizing MSC-based therapies for effective cartilage repair.