Adult mesenchymal stem cells (MSCs) have been suggested to decrease lymphocyte proliferation in vitro. We hypothesised that foetal MSCs (fMSCs) would have an immunosuppressive effect on allograft responses in vitro. Human MSCs were isolated and cultured from first-trimester foetal livers and characterised by flow cytometry. fMSC stained positive for CD29, CD44, CD166, CD105, SH-3 and SH-4, and negative for CD14, CD34 and CD45. When plated on adipogenic, chondrogenic and osteogenic media, fMSC differentiated into the respective cell lineage. Compared to adult MSC (aMSC), the proliferative capacity of fMSC was higher. Mitogen stimulation of PBL was inhibited by fMSC. The greatest inhibition (78%) was seen when 30,000 fMSCs were added to 150,000 lymphocytes stimulated by phytohaemagglutinin. Adult and fMSCs were added to mixed lymphocyte cultures (MLC) containing peripheral blood lymphocytes or foetal liver cells. Unlike aMSC, fMSCs did not inhibit MLC. fMSC could be culture-expanded several million folds with no loss of phenotype characteristics, which makes them ideal for ex vivo expansion. fMSC inhibit lymphocyte proliferation induced by mitogens, but not alloreactivity as measured by MLC.