Mesenchymal stem cells (MSCs) and macrophages are fundamental components of the stem cell niche and function coordinately to regulate haematopoietic stem cell self-renewal and mobilization. Recent studies indicate that mitophagy and healthy mitochondrial function are critical to the survival of stem cells, but how these processes are regulated in MSCs is unknown. Here we show that MSCs manage intracellular oxidative stress by targeting depolarized mitochondria to the plasma membrane via arrestin domain-containing protein 1-mediated microvesicles. The vesicles are then engulfed and re-utilized via a process involving fusion by macrophages, resulting in enhanced bioenergetics. Furthermore, we show that MSCs simultaneously shed micro RNA-containing exosomes that inhibit macrophage activation by suppressing Toll-like receptor signalling, thereby de-sensitizing macrophages to the ingested mitochondria. Collectively, these studies mechanistically link mitophagy and MSC survival with macrophage function, thereby providing a physiologically relevant context for the innate immunomodulatory activity of MSCs.