In vitro-generated mesenchymal stem cells (MSCs) initially attracted interest for their ability to undergo differentiation toward cells of different lineages. More recently, a major breakthrough was the discovery that MSCs exert a profound inhibitory effect on T cell proliferation in vitro and in vivo. Subsequently, MSCs were shown also to exert similar effects on B cells, dendritic cells and natural killer cells. These results suggested that MSCs could be used to dampen immune-mediated diseases and transplant rejection. It is possible that some of the beneficial effects of MSCs might reflect, in part, the trophic and protective activities they exert on injured cells and tissues, rather than resulting from a true transdifferentiation. In immune-mediated diseases, the protective effects might function in concert with the immunosuppressive and anti-inflammatory activities.