Chronic wounds present a huge burden for patients and healthcare systems. Effective treatments are still lacking due to the complex wound microenvironment, persistent inflammation, and suppressed angiogenesis. Stem cells (SCs) show great promise due to their robust proliferation, multilineage differentiation potential, immunomodulatory properties, and neo-angiogenesis capacities. This chapter aims to review the applications of stem cells in wound healing and the underlying mechanisms of SCs-mediated wound repair. These include SCs’ paracrine signalling, transdifferentiation potential into various cell types such as fibroblasts, keratinocytes, and endothelial cells, secreted exosomes, mitochondrial transfer, and extracellular matrix (ECM) remodelling. We also explore the significant use of SCs from different sources and the advantages and disadvantages of each source, as well as the preferred routes of administration, diverse stem cell types, their mechanisms of action and delivery strategies. We will finally highlight the ongoing clinical trials using regenerative medicine in healing chronic wounds, and the challenges in the application of regenerative medicine approaches to achieve reliable and safe treatments for chronic wounds.