Despite increasing knowledge regarding the cellular and molecular mechanisms of liver fibrogenesis, there is currently no approved drug for the treatment of liver fibrosis. Mesenchymal stem cells (MSCs) are multipotent progenitor cells representing an attractive therapeutic tool for tissue damage and inflammation. This study was designed to determine the protective effect and underlying mechanism of human umbilical cord-derived MSCs (UC-MSCs) on thioacetamide-induced liver fibrosis. Liver fibrosis was induced in mice by intraperitoneal injection of thioacetamide (TAA). Some mice were then given injection of UC-MSCs or UC-MSCs-derived exosomes (UC-MSCs-Exo) via the tail vein. Liver tissues were collected for histologic analysis. We found that administration of UC-MSCs significantly reduced serum alanine aminotransferase and aspartate aminotransferase levels, and attenuated hepatic inflammation and fibrosis. Moreover, the therapeutic effect of UC-MSCs-derived exosomes was similar to that of UC-MSCs. Intriguingly, UC-MSCs-Exo treatment downregulated the expression of smoothened (SMO), a fundamental component of Hedgehog signaling which plays a critical role in fibrogenesis, and subsequently inhibited the activation of hepatic stellate cells, a central driver of fibrosis in experimental and human liver injury. Furthermore, the anti-inflammatory and anti-fibrotic effects of UCMSCs- Exo was reversed by the SMO agonist SAG treatment in mice. Our findings suggest that UC-MSCs-Exo exert therapeutic effects on liver fibrosis, at least in part, through inhibiting the Hedgehog/SMO signaling pathway.