Human mesenchymal stem cells (MSCs) were evaluated for their ability to activate allogeneic T cells in cell mixing experiments. Phenotypic characterization of MSCs by flow cytometry showed expression of MHC Class I alloantigens, but minimal expression of Class II alloantigens and costimulatory molecules, including CD80 (B7-1), CD86 (B7-2), and CD40. T cells purified from peripheral blood mononuclear cells (PBMCs) did not proliferate to allogeneic MSCs. Lack of response was not due to a deficiency of costimulation, since retroviral transduction of MSCs with either B7-1 or B7-2 costimulatory molecules did not result in lymphoproliferation. Although these results suggested that MSCs were immunologically inert or potentially tolerogenic, T cells cultured with MSCs produced IFN-gamma and displayed secondary kinetics to restimulation with PBMCs, indicating alloantigen priming rather than tolerance induction by the MSCs. To determine whether MSCs suppressed alloreactive T cells, MSCs were added to primary mixed lymphocyte reaction (MLR) cultures. MSCs suppressed cell proliferation when added at the initiation of culture or when added to an ongoing MLR culture. Suppression was dose-dependent, genetically unrestricted, and occurred whether or not MSCs were pretreated with IFN-gamma. MSCs in transwell chambers suppressed primary MLR cultures, indicating that suppression was mediated by soluble molecules. Analysis of cytokines in suppressed MLR cultures demonstrated up-regulation of IFN-gamma and IL-10, and down-regulation of TNF-alpha production relative to control cultures. We conclude that MSCs can initiate activation of alloreactive T cells, but do not elicit T cell proliferative responses due to active suppressive mechanisms.