Skin tissue engineering has made remarkable progress in wound healing treatment with the advent of newer fabrication strategies using natural/synthetic polymers and stem cells. Stem cell therapy is used to treat a wide range of injuries and degenerative diseases of the skin. Nevertheless, many related studies demonstrated modest improvement in organ functions due to the low survival rate of transplanted cells at the targeted injured area. Thus, incorporating stem cells into biomaterial offer niches to transplanted stem cells, enhancing their delivery and therapeutic effects. Currently, through the skin tissue engineering approach, many attempts have employed biomaterials as a platform to improve the engraftment of implanted cells and facilitate the function of exogenous cells by mimicking the tissue microenvironment. This review aims to identify the limitations of stem cell therapy in wound healing treatment and potentially highlight how the use of various biomaterials can enhance the therapeutic efficiency of stem cells in tissue regeneration post-implantation. Moreover, the review discusses the combined effects of stem cells and biomaterials in in vitro and in vivo settings followed by identifying the key factors contributing to the treatment outcomes. Apart from stem cells and biomaterials, the role of growth factors and other cellular substitutes used in effective wound healing treatment has been mentioned. In conclusion, the synergistic effect of biomaterials and stem cells provided significant effectiveness in therapeutic outcomes mainly in wound healing improvement.