Mesenchymal stem cells (MSCs), as self-renewing multipotent stromal cells, have been considered promising agents for cancer treatment. A large number of studies have demonstrated the valuable properties of MSC-based treatment, such as low immunogenicity and intrinsic tumor-trophic migratory properties. To enhance the potency of MSCs for therapeutic purposes, equipping MSCs with targeted delivery functions using genetic engineering is highly beneficial. Genetically engineered MSCs can express tumor suppressor agents such as pro-apoptotic, anti-proliferative, anti-angiogenic factors and act as ideal delivery vehicles. MSCs can also be loaded with nanoparticle drugs for increased efficacy and externally moderated targeting. Moreover, exosomes secreted by MSCs have important physiological properties, so they can contribute to intercellular communication and transfer cargo into targeted tumor cells. The precise role of genetically modified MSCs in tumor environments is still up for debate, but the beginning of clinical trials has been confirmed by promising results from preclinical investigations of MSC-based gene therapy for a wide range of malignancies. This review highlights the advanced techniques of engineering/nano-engineering and MSC-derived exosomes in tumor-targeted therapy.