Physiological attributes of mesenchymal stem cells (MSCs) including straightforward manipulation, multilineage differentiation, immunoregulation, and tropism for injury settings render them ideal therapeutic agents for tissue repair/regeneration. Nevertheless, further studies in suitable animal models of disease are needed to translate the potential of MSCs into clinical applications. We report here the isolation and preliminary characterization of MSCs from fetal rabbit liver (fl-MSCs). Compared with MSCs isolated from adult rabbit bone marrow, fl-MSCs had superior growth rate, clonogenic capability, and plastic adherence owing to their developmental immaturity. Both cytochemical staining and mRNA expression analysis of fl-MSCs confirmed mesodermal lineage differentiation into adipocytes, osteocytes, and chondrocytes. Moreover, fl-MSCs were capable to prevent lymphocyte proliferation both in a 2-way MLC and upon phytohemagglutinin (PHA) stimulation. In contrast, fl-MSCs co-cultured with allogeneic lymphocytes induced proliferation of the latter. Relatedly, although freshly isolated fl-MSCs did express neither major histocompatibility complex (MHC) class I/II nor CD80/CD86, all these immune synapse components were induced upon in vitro culture. Furthermore, fl-MSCs became efficiently transduced for long-term transgene expression with a retroviral vector. Thus, the special biological qualities of fl-MSCs endow them as model candidate vehicles/agents for gene/cell therapy strategies applied to a variety of rabbit models of injury, such as osteochondral lesions.