Introduction: Mesenchymal stromal (stem) cell (MSC) therapies are emerging as a promising therapeutic intervention in patients with Acute Respiratory Distress Syndrome (ARDS) and sepsis due to their reparative, immunomodulatory, and antimicrobial properties. Areas covered: This review provides an overview of Mesenchymal Stromal Cells (MSCs) and their mechanisms of effect in ARDS and sepsis. The preclinical and clinical evidence to support MSC therapy in ARDS and sepsis is discussed. The potential for MSC therapy in COVID-19 ARDS is discussed with insights from respiratory viral models and early clinical reports of MSC therapy in COVID-19. Strategies to optimise the therapeutic potential of MSCs in ARDS and sepsis are considered including preconditioning, altered gene expression, and alternative cell free MSC derived products, such as extracellular vesicles and conditioned medium. Expert opinion: MSC products present considerable therapeutic promise for ARDS and sepsis. Preclinical investigations report significant benefit and early phase clinical studies have not highlighted safety concerns. Optimisation of MSC function in preclinical models of ARDS and sepsis has enhanced their beneficial effects. MSC derived products, as cell free alternatives, may provide further advantages in this field. These strategies present opportunity for the clinical development of MSCs and MSC derived products with enhanced therapeutic efficacy.