Skeletal muscle represents the largest mass of tissue in the body and is essential for motion and posture. Traumatic injury, tumor ablation, prolonged denervation or genetic defects lead to skeletal myopathies. The loss of muscle function or its regenerative properties often results in pain, deformity, and joint malfunction. The regenerative capacity of skeletal muscles depends on adult muscle stem cells, the so-called satellite cells; however, the population of these myogenic precursors, and thus their potential to restore large muscle tissue defects, is strongly limited. On the other hand, surgical treatment of skeletal muscle loss is hampered by the scarcity of functional replacement tissue. Only a few options currently exist to provide functional and aesthetic restoration of lost muscle tissues, other than free muscle flap transfer. While this reconstructive technique is a common practice, it involves the risk of significant donor-site morbidity. Therefore, alternative cells with the potential to regenerate muscle tissue need to be examined. Recently, many surgeons have studied the potential clinical application of mesenchymal stem cells (MSCs), which are an adult stem cell population that can undergo differentiation along the mesodermal lineage and secrete growth factors that can enhance tissue regeneration processes by promoting neovascularization. The regenerative potential of MSCs has been widely studied in vitro and in vivo in animal models. MSCs from adipose tissue as well as bone marrow have been shown to bear myogenic potential, which makes them ideal candidate stem cells for skeletal muscle tissue engineering applications. When compared to reconstructive procedures using autograft tissues, MSC therapy offers the potential of reducing or even eliminating donor-site morbidity. This review gives a comprehensive overview of the use of MSCs in in vitro muscle generation and in vivo muscle regeneration.