Neurodegeneration refers to the gradual loss of neurons and extensive changes occur in glial cells like tau inclusions in astrocytes and oligodendrocytes, α-synuclein inclusions in oligodendrocytes and SOD1 aggregates in astrocytes along with deterioration in the motor, cognition, learning, and behaviour. Common neurodegenerative disorders are Alzheimer’s Disease (AD), Parkinson’s Disease (PD), Amyotrophic Lateral Sclerosis (ALS), Huntington’s disease (HD), Spinocerebellar Ataxia (SCAs), and Supranuclear palsy are some common one. There is a lack of effective treatment for neurodegenerative diseases, and scientists are putting their efforts into developing therapies against them. Stem cell therapy has emerged as a hope for neurodegenerative disorders since it is not only the damaged neurons that might be replaced, but other neuromodulators and neuroprotectors are secreted. Stem cell terminal differentiation before implantation ensures the implantation of correct cells and molecular markers like carbonic anhydrase II, CNPase (2′,3′-cyclic nucleotide 3′-phosphohydrolase), myelin basic protein (MBP), and myelin oligodendrocyte glycoprotein (MOG) elucidate the differentiation. Secretion of various growth factors like epidermal growth factor (EGF), keratinocyte growth factor (KGF), vascular endothelial growth factor-α (VEGF-α), transforming growth factor (TGF) and macrophage inflammatory protein (MIP) supports cell survival, cell proliferation, blood vessel formation, axon regeneration, and neuroglial functional connection formation at the site of degeneration. Adverse effects of stem cell therapy, like teratogenicity and differentiation in different cells other than the desired one under the influence of microenvironment, are a few key concerns. Post-transplantation improved synaptic plasticity, apoptosis inhibition, and reduction in tau-phosphorylation and Amyloid beta (Aβ) production has been observed in Alzheimer’s patients.A large number of experimental, preclinical, and clinical studies have been conducted, and encouraging results have been obtained. The present review exhaustively discusses various kinds of stem cells, their usage in treating neurodegenerative disorders, limitations and challenges, and ethical issues related to stem cell therapy.