Chitosan, the deacetylated form of chitin, has been extensively used for tissue engineering in the form of hydrogel, scaffolds, microparticles, nanoparticles, and nanofibers. To develop composite constructs with targeted tissue regeneration, chitosan is often combined with hydroxyapatite, collagen, gelatin, hyaluronic acid, silk fibroin, etc. biomaterials. In addition to this, chitosan is often modified with varied physico-chemical properties. For regenerative application, to improve the efficacy of constructs, chitosan in various forms is combined with various stem cells, among which mesenchymal stem cells (MSCs) have been studied widely. In this review we focused on the studies that exclusively used chitosan in combination with multipotent adipose and bone marrow-derived MSCs and pluripotent-induced pluripotent stem cells (iPSCs). When cultured on chitosan, stem cells displayed greater affinity in terms of cellular adhesion, proliferation, and differentiation into functional cell types both in vitro albeit different potential. When transplanted in vivo, stem cell-laden chitosan constructs showed greater integrity into the host system, differentiated into targeted cells, and demonstrated improved repair of the damaged tissue. These studies provide great insight into the current and future potential of chitosan for regenerative applications.