Background The novel coronavirus first emerged in Wuhan, China, and quickly spread across the globe, spanning various countries and resulting in a worldwide pandemic by the end of December 2019. Given the current advances in treatments available for COVID-19, mesenchymal stem cell (MSC) therapy seems to be a prospective option for management of ARDS observed in COVID-19 patients. This present study is aimed at exploring the therapeutic potential and safety of using MSC obtained by isolation from health cord tissues in the treatment of patients with COVID-19. Methods A systematic search was done based on the guidelines of the PRISMA 2020 statement. A literature search was executed using controlled vocabulary and indexing of trials to evaluate all the relevant studies involving the use of medical subject headings (MeSH) in electronic databases like PubMed, Embase, Scopus, Cochrane Central Register of Controlled Trials (CENTRAL), and clinicaltrials.gov up to 31 December 2021. The protocol was registered in the PROSPERO register with ID CRD42022301666. Findings. After screening finally, 22 remaining articles were included in this systematic review. The studies revealed that MSC exosomes are found to be superior to MSC alone in terms of safety owing to being smaller with a lesser immunological response which leads to free movement in blood capillaries without clumping and also cannot further divide, thus reducing the oncogenic potential of MSC-derived exosomes as compared to MSC only. The studies demonstrated that the lungs healed with the use of exosomes compared to how they presented initially at the hospital. MSCs are found to increase the angiogenesis process and alveolar reepithelization, reducing markers like TNF alpha, TGF beta, and COL I and III, reducing the growth of myofibroblasts and increasing survivability of endothelium leading to attenuated pulmonary fibrosis and even reversing them. Interpretation. We can conclude that the use of mesenchymal stem cells or their derived exosomes is safe and well-tolerated in patients with COVID-19. It improves different parameters of oxygenation and helps in the healing of the lungs. The viral load along with different inflammatory cells and biomarkers of inflammation tend to decrease. Chest X-ray, CT scan, and different radiological tools are used to show improvement and reduced ongoing destructive processes.