Mesenchymal stem cells (MSCs) are largely studied for their potential clinical use. Recently, they have gained further interest after demonstration of an immunosuppressive role. In this study, we investigated whether in vivo injection of MSCs could display side effects related to systemic immunosuppression favoring tumor growth. We first showed in vitro that the murine C3H10T1/2 (C3) MSC line and primary MSCs exhibit immunosuppressive properties in mixed lymphocyte reaction. We demonstrated that this effect is mediated by soluble factors, secreted only on “activation” of MSCs in the presence of splenocytes. Moreover, the immunosuppression is mediated by CD8⁺ regulatory cells responsible for the inhibition of allogeneic lymphocyte proliferation. We then demonstrated that the C3 MSCs expressing the human bone morphogenetic protein 2 (hBMP-2) differentiation factor were not rejected when implanted in various allogeneic immunocompetent mice and were still able to differentiate into bone. Importantly, using a murine melanoma tumor model, we showed that the subcutaneous injection of B16 melanoma cells led to tumor growth in allogeneic recipients only when MSCs were coinjected. Although the potential side effects of immunosuppression induced by MSCs have to be considered in further clinical studies, the usefulness of MSCs for various therapeutic applications still remains of great interest. (Blood. 2003;102:3837-3844)