Human mesenchymal stem cells (MSCs) have immuno-modulatory properties. They inhibit T-cell proliferation to mitogens and alloantigens in vitro and prolong skin graft survival in vivo. We found that MSCs inhibited the proliferation of peripheral blood lymphocytes (PBLs) to phorbol myristate acetate (PMA), suggesting that MSCs exert an inhibitory effect downstream of the receptor level. We analyzed cytokine profiles of PBLs co-cultured with MSCs. MSCs increased interleukin (IL)-2 and soluble IL-2 receptor in mixed lymphocyte cultures (MLCs), while IL-2 and IL-2R decreased in phytohemagglutinin (PHA)-stimulated PBL cultures. MSCs inhibited IL-2 induced proliferation, without absorbing IL-2. IL-10 levels increased in MLCs co-cultured with 10% MSCs, while the levels were not affected in PHA cultures. In MLCs inhibited by MSCs, antibodies against IL-10 further suppressed proliferation but had no effect in PHA cultures. Addition of indomethacin, an inhibitor of prostaglandin-synthesis, restored part of the inhibition by MSCs in PHA cultures. However, indomethacin did not affect MSC-induced inhibition in MLCs. To conclude, our data indicate that MSC-induced suppression is a complex mechanism affecting IL-2 and IL-10 signaling and may function differently, depending on T-cell stimuli. Prostaglandins are important in the inhibition by MSCs when the T cells were activated by PHA, but not alloantigens.