Osteoarthritis (OA) is a degenerative condition of the temporomandibular joint (TMJ) characterised by chronic inflammation and damage to joint structures. Because of the complexity of TMJ-OA, only symptomatic treatments are currently available. Recent reports have shown that many of stem cells can exert anti-inflammatory and tissue-regenerating effects. In this study, we investigated the potential cartilage-regenerating and anti-inflammatory effects of human umbilical cord matrix-mesenchymal stem cells (hUCM-MSCs) for the treatment of TMJ-OA. hUCM-MSC lines, isolated from different donors, which showed different activities in vitro. Using a selected cell line, we used different concentrations of hUCM-MSCs to assess therapeutic effects in a rabbit model of monosodium iodoacetate-induced TMJ-OA. Compared with the untreated control group, the potential regenerative result and anti-inflammatory effects of hUCM-MSCs were evident at all the tested concentrations in rabbits with induced TMJ-OA. The median dose of hUCM-MSCs showed the prominent cartilage protective effect and further cartilage regeneration potential. This effect occurred via upregulated expression of growth factors, extracellular matrix markers, and anti-inflammatory cytokines, and reduced expression of pro-inflammatory cytokines. The anti-inflammatory effect of hUCM-MSCs was comparable to that of dexamethasone (DEX). However, only hUCM-MSCs showed potential chondrogenesis effects in this study. In conclusion, our results indicate that hUCM-MSCs may be an effective treatment option for the treatment of TMJ-OA.