Human bone marrow mesenchymal stem cells (BM-MSC) are multipotent progenitor cells that have transient immunomodulatory properties on Natural Killer (NK) cells, Dendritic Cells (DC), and T cells. This study compared the use of MSC isolated from bone marrow and fetal liver (FL-MSC) to determine which displayed the most efficient immunosuppressive effects on T cell activation. Although both types of MSC exhibit similar phenotype profile, FL-MSC displays a much more extended in vitro life-span and immunomodulatory properties. When co-cultured with CD3/CD28-stimulated T cells, both BM-MSC and FL-MSC affected T cell proliferation by inhibiting their entry into the cell cycle, by inducing the down-regulation of phospho-retinoblastoma (pRb), cyclins A and D1, as well as up-regulating p27(kip1) expression. The T cell inhibition by MSC was not due to the soluble HLA-G5 isoform, but to the surface expression of HLA-G1, as shown by the need of cell-cell contact and by the use of neutralizing anti-HLA-G antibodies. To note, in a HLA-G-mediated fashion, MSC facilitated the expansion of a CD4(low)/CD8(low) T subset that had decreased secretion of IFN-γ, and an induced secretion of the immunomodulatory cytokine IL-10. Because of their longer lasting in vitro immunosuppressive properties, mainly mediated by HLA-G, and their more efficient induction of IL-10 production and T cell apoptosis, fetal liver MSC could be considered a new tool for MSC therapy to prevent allograft rejection.