Spinal Cord Injury (SCI) is a common neurological disorder with devastating psychical and psychosocial sequelae. The majority of patients after SCI suffer from permanent disability caused by motor dysfunction, impaired sensation, neuropathic pain, spasticity as well as urinary complications, and a small number of patients experience a complete recovery. Current standard treatment modalities of the SCI aim to prevent secondary injury and provide limited recovery of lost neurological functions. Stem Cell Therapy (SCT) represents an emerging treatment approach using the differentiation, paracrine, and self-renewal capabilities of stem cells to regenerate the injured spinal cord. To date, multipotent stem cells including mesenchymal stem cells (MSCs), neural stem cells (NSCs), and hematopoietic stem cells (HSCs) represent the most investigated types of stem cells for the treatment of SCI in preclinical and clinical studies. The microenvironment of SCI has a significant impact on the survival, proliferation, and differentiation of transplanted stem cells. Therefore, a deep understanding of the pathophysiology of SCI and molecular mechanisms through which stem cells act may help improve the treatment efficacy of SCT and find new therapeutic approaches such as stem-cell-derived exosomes, gene-modified stem cells, scaffolds, and nanomaterials. In this literature review, the pathogenesis of SCI and molecular mechanisms of action of multipotent stem cells including MSCs, NSCs, and HSCs are comprehensively described. Moreover, the clinical efficacy of multipotent stem cells in SCI treatment, an optimal protocol of stem cell administration, and recent therapeutic approaches based on or combined with SCT are also discussed.