Mesenchymal stem cells (MSC) derived from adult BM or fetal liver form several mesenchymal tissues after appropriate stimulation. Reports indicate that MSC have unique immunologic properties, making them ideal for cellular therapy. MSC are not immunogenic, they do not stimulate alloreactivity, and they escape lysis by cytotoxic T-cells and natural killer (NK)-cells. Thus, MSC may be transplantable between HLA-mismatched individuals without the need for host immunosuppression. Furthermore, adult MSC appear to be immunosuppressive as they reduce alloreactivity and the formation of cytotoxic lymphocytes in vitro. In vivo, adult MSC prolong the time to rejection of mis-matched skin grafts in baboons. The immunosuppressive properties of first trimester fetal MSC are less pronounced, but inducible with IFNgamma. These findings imply a potential role for MSC, not only in the repair of damaged tissues, but also in the manipulation of immune responses.