Stem cell–based regenerative medicine is a promising approach in tissue reconstruction. Here we show that proinflammatory T cells inhibit the ability of exogenously added bone marrow mesenchymal stem cells (BMMSCs) to mediate bone repair. This inhibition is due to interferon γ (IFN-γ)–induced downregulation of the runt-related transcription factor 2 (Runx-2) pathway and enhancement of tumor necrosis factor α (TNF-α) signaling in the stem cells. We also found that, through inhibition of nuclear factor κB (NF-κB), TNF-α converts the signaling of the IFN-γ–activated, nonapoptotic form of TNF receptor superfamily member 6 (Fas) in BMMSCs to a caspase 3– and caspase 8–associated proapoptotic cascade, resulting in the apoptosis of these cells. Conversely, reduction of IFN-γ and TNF-α concentrations by systemic infusion of Foxp3⁺ regulatory T cells, or by local administration of aspirin, markedly improved BMMSC-based bone regeneration and calvarial defect repair in C57BL/6 mice. These data collectively show a previously unrecognized role of recipient T cells in BMMSC-based tissue engineering.