Central nervous system (CNS) disorders, including spinal cord injury (SCI) and traumatic brain injury (TBI), often result in severe and irreversible functional impairments due to complex pathophysiological processes such as neuroinflammation, axonal damage, and neuronal cell death. Conventional treatment strategies have shown limited efficacy in restoring neurological function. Stem cell therapy has emerged as a promising avenue for CNS repair, offering potential benefits such as neuronal regeneration, modulation of immune responses, and secretion of neurotrophic factors. Various stem cell types, including neural stem cells (NSCs), mesenchymal stem cells (MSCs), and induced pluripotent stem cells (iPSCs), have demonstrated therapeutic potential in the preclinical and early clinical studies for conditions such as TBI, SCI, stroke, Parkinson's disease, and multiple sclerosis. Despite significant progress, challenges such as cell delivery optimization, risk of tumorigenesis, immune compatibility, and ethical concerns must be addressed to enable broader clinical application. This review highlights the recent advances in stem cell-based therapies for CNS disorders, discusses the mechanisms underlying their therapeutic effects, and outlines future directions for research and clinical translation.