Acute respiratory distress syndrome is a major cause of respiratory failure in critically ill patients. Despite extensive research into its pathophysiology, mortality remains high. No effective pharmacotherapy exists. Based largely on numerous preclinical animal studies, administration of mesenchymal stem or stromal cell (MSC) as a therapeutic for acute lung injury (ALI) holds great promise, and Phase I and II clinical trials are currently under way internationally. However, concern for the use of stem cells, specifically the risk of iatrogenic tumor formation, as well as the prohibitive cost of production, storage, and distribution of cells in bone marrow transplant facilities, may limit access to this lifesaving therapy. Accumulating evidence now suggest that novel stem cell–derived therapies, including MSC‐conditioned medium and extracellular vesicles (EVs) released from MSCs, might constitute compelling alternatives. The current review summarizes the preclinical studies testing MSC EVs as treatment for ALI and other inflammatory lung diseases. While certain logistic obstacles limit the clinical applications of MSC‐conditioned medium such as the volume required for treatment and lack of standardization of what constitutes the components of conditioned medium, the therapeutic application of MSC EVs remains promising, primarily due to ability of EVs to maintain the functional phenotype of the parent cell. However, utilization of MSC EVs will require large‐scale production and standardization concerning identification, characterization, and quantification.