Mesenchymal stromal cells (MSCs) exhibit significant potential in the context of cell therapy because of their capacity to perform a range of interconnected functions in damaged tissues, including immune modulation, hematopoietic support, and tissue regeneration. MSCs are hypoimmunogenic because of their diminished expression of major histocompatibility molecules, absence of costimulatory molecules, and presence of coinhibitory molecules. While autologous MSCs reduce the risk of rejection and infection, variability in cell numbers and proliferation limits their potential applications. Conversely, allogeneic MSCs (allo-MSCs) possess broad clinical applications unconstrained by donor physiology. Nonetheless, preclinical and clinical investigations highlight that transplanted allo-MSCs are subject to immune attack from recipients. These cells exhibit anti-inflammatory and proinflammatory phenotypes contingent on the microenvironment. Notably, the proinflammatory phenotype features enhanced immunogenicity and diminished immunosuppression, potentially triggering allogeneic immune reactions that impede long-term clinical efficacy. Consequently, preserving the low immunogenicity of allo-MSCs in vivo and mitigating immune rejection in diverse microenvironments represent crucial challenges for the widespread clinical application of MSCs. In this review, we elucidate the immune regulation of allo-MSCs, specifically focusing on two distinct subgroups, MSC1 and MSC2, that exhibit varying polarization states and immunogenicity. We discuss the factors and underlying mechanisms that induce MSC immunogenicity and polarization, highlighting the crucial role of major histocompatibility complex class I/II molecules in rejection post-transplantation. Additionally, we summarize the immunogenic regulatory targets and applications of allo-MSCs and outline strategies to address challenges in this promising field, aiming to enhance allo-MSC therapeutic efficacy for patients.