Knee Osteoarthritis is one of the most common degenerative diseases. Although the morbidity of knee osteoarthritis increases dramatically, there is no effective medication that can repair the damaged articular cartilage and restore the joint function. Recently, with the technical development of cell transplantation and regulation, more attentions have been paid in this area. The techniques included osteochondral autograft transplantation, mosaicplasty, chondrocytes based matrix-induced autologous chondrocyte implantation, and mesenchyma stem cells based cell therapy. The study of cell differentiation is also more in-depth. It has been confirmed that all of these methods can alleviate the symptoms and improve the function of knee osteoarthritis to some extent. Stem cell therapy seems have greater advantage than other intervention. Massive chondrocytes can be gained through induction and culture of mesenchyma stem cells in vitro, and regenerated cartilage could be found on the surface after delivering stem cells into knee joint through a certain way. These technologies are hopeful to prevent from knee osteoarthritis or even reverse the progress of it at early stage. However, there are a variety of problems about in vitro cell transplantation, such as the unknowing regulation of mesenchyma stem cells, the difficulty of keeping the characteristic stability of new born chondrocytes, the integrity of new cartilage tissue and the way chondrocytes delivered. Cell therapy has been applied both in basic research and in clinic trials. The present review is focused in the current progress of cell therapy in knee osteoarthritis and discuss the challenges and troubles. Furthermore, we also summarize a series of ongoing clinical trials, and try to find out the exact clinical effects of cartilage repair by using cell therapy.