Stem cells have emerged as an important approach to repair and regenerate damaged tissues or organs and show great therapeutic potential in a variety of diseases. However, the low survival of engrafted stem cells still remains a major challenge for stem cell therapy. As a major hormone from the pineal gland, melatonin has been shown to play an important role in regulating the physiological and pathological functions of stem cells, such as promoting proliferation, migration and differentiation. Thus, melatonin combined with stem cell transplantation displayed promising application potential in neurodegenerative diseases, liver cirrhosis, wound healing, myocardial infarction, kidney ischemia injury, osteoporosis, etc. It exerts its physiological and pathological functions through its anti-oxidant, anti-inflammatory, anti-apoptosis and anti-ageing properties. Here, we summarize recent advances on exploring the biological role of melatonin in stem cells, and discuss its potential applications in stem cell-based therapy.