Recent data suggest that adult mesenchymal stem cells (MSCs) might enhance allogeneic hematopoietic engraftment and prevent graft-versus-host disease (GVHD) owing to their immunosuppressive nature. Using a murine model of acute GVHD, this study examined whether or not the immunosuppressive properties of MSCs could reduce the severity of experimental GVHD. The early injection of MSCs after transplant did not attenuate the severity of acute GVHD. Therefore, this study investigated whether or not the use of IL-10-transduced MSCs (IL-10 MSCs) could reduce the severity of acute GVHD. Lethally irradiated recipients were transplanted and injected with IL-10 MSCs, the MSC-expressing vector alone (vector MSCs), or the diluent (controls), respectively, on day +1. Compared with the vector MSCs or controls, there was a significantly lower mortality in the recipients of the IL-10 MSCs at day 50 after the transplant (percent survival, 0 or 10 vs 70%, P=0.0004 or 0.0064, respectively). The decrease in mortality was confirmed by the semi-quantitative GVHD score (P<0.05), and was associated with decreased serum levels of the pro-inflammatory cytokines, IFN-gamma, on day +7 (P=0.015). Therefore, beneficial effects on GVHD were observed when MSCs were engineered to express the anti-inflammatory cytokine, IL-10.