We studied the immunoregulatory features of murine mesenchymal stem cells (MSCs) in vitro and in vivo. MSCs inhibited T-cell receptor (TCR)-dependent and -independent proliferation but did not induce apoptosis on T cells. Such inhibition was paired with a decreased interferon (IFN)-gamma and tumor necrosis factor (TNF)-alpha production and was partially reversed by interleukin-2 (IL-2). Thus, we used MSCs to treat myelin oligodendrocyte glycoprotein (MOG)35-55-induced experimental autoimmune encephalomyelitis (EAE) in C57BL/6J mice. We injected intravenously 1 × 10⁶ MSCs before disease onset (preventive protocol) and at different time points after disease occurrence (therapeutic protocol). MSC administration before disease onset strikingly ameliorated EAE. The therapeutic scheme was effective when MSCs were administered at disease onset and at the peak of disease but not after disease stabilization. Central nervous system (CNS) pathology showed decreased inflammatory infiltrates and demyelination in mice that received transplants of MSCs. T-cell response to MOG and mitogens from MSC-treated mice was inhibited and restored by IL-2 administration. Upon MSC transfection with the enhanced green fluorescent protein (eGFP), eGFP⁺ cells were detected in the lymphoid organs of treated mice. These data suggest that the immunoregulatory properties of MSCs effectively interfere with the autoimmune attack in the course of EAE inducing an in vivo state of T-cell unresponsiveness occurring within secondary lymphoid organs. (Blood. 2005; 106:1755-1761)