Acute Respiratory Distress Syndrome (ARDS) constitutes a spectrum of severe acute respiratory failure in response to a variety of inciting stimuli that is the leading cause of death and disability in the critically ill. Despite decades of research, there are no therapies for ARDS, and management remains supportive. A growing understanding of the complexity of the pathophysiology of ARDS, coupled with advances in stem cell biology, has lead to a renewed interest in the therapeutic potential of mesenchymal stem cells for ARDS. Recent evidence suggests that mesenchymal stem cells can modulate the immune response to reduce injury and also increase resistance to infection, while also facilitating regeneration and repair of the injured lung. This unique combination of effects has generated considerable excitement. We review the biological characteristics of mesenchymal stem cells that underlie their therapeutic potential for ARDS. We also summarise existing pre-clinical evidence, evaluate the potential and pitfalls of using mesenchymal stem cells for treatment, and examine the likely future directions for mesenchymal stem cells in ARDS.