Systemic lupus erythematosus (SLE) has been considered as stem cell disorder. The objective of this study was to examine the phenotype, growth and immunomodulatory effect of mesenchymal stem cells (MSCs) from SLE patients compared with those from age- and sex-matched healthy donors. MSCs were expanded from bone marrow aspirate and were examined for morphological appearance, quantified in different passages to determine growth rate and evaluated for ability of adipogenesis and osteogenesis. Telomerase activity was measured by telomerase repeat amplification protocol. The immunomodulatory effect of MSCs was evaluated by mixed lymphocyte reaction. MSCs from SLE patients were found to be bigger and flattened in appearance after passage 3 and demonstrated slower growth rate compared with fibroblast-like MSCs from normal controls. These cells were not able to reach confluence after passage 4. Telomerase activity was upregulated in five SLE patients mostly with active disease compared with two with negative expression with lesser activity. MSCs from SLE patients were, otherwise, comparable to normal controls in terms of their surface marker (CD73, CD90 and CD105) expression and extent of suppression on proliferation of allogeneic T lymphocytes. In conclusion, MSCs from SLE demonstrated early signs of senescence which may be a corollary of active lupus or a contributory factor to disease pathogenesis. Lupus (2010) 19, 850-859.