Knee osteoarthritis (KOA) is a prevalent degenerative joint disease characterized by synovial inflammation, cartilage loss. Often manifesting as joint pain and limited mobility, it severely affects the quality of life of patients. Traditional treatment methods such as pharmacological injections and surgical interventions primarily aim to alleviate symptoms but have limited effects on cartilage repair. Human umbilical cord mesenchymal stem cells (hUC-MSCs), due to their anti-inflammatory and chondrogenic capabilities, is considered a new hope for the treatment of KOA. This article synthesizes the latest research findings from both domestic and international sources to discuss the theoretical basis for the clinical application of hUC-MSCs in treating KOA, clinical study design, and efficacy evaluation. It also addresses the challenges in the clinical application of hUC-MSCs and explores future directions, in the hope of providing feasible theoretical support for the treatment of KOA with hUC-MSCs.