Mesenchymal stem cells (MSC) display unique suppressive properties on T-cell immunity, thus representing an attractive vehicle for the treatment of conditions associated with harmful T-cell responses such as organ-specific autoimmunity and graft-versus-host disease. Toll-like receptors (TLR) are primarily expressed on antigen-presenting cells and recognize conserved pathogen-derived components. Ligation of TLR activates multiple innate and adaptive immune response pathways to eliminate and protect against invading pathogens. In this work, we show that TLR expressed on human bone marrow-derived MSC enhanced the immunosuppressive phenotype of MSC. Immunosuppression mediated by TLR was dependent on the production of immunosuppressive kynurenines by the tryptophan-degrading enzyme indoleamine-2,3-dioxygenase-1 (IDO1). Induction of IDO1 by TLR involved an autocrine interferon (IFN)-beta signaling loop, which was dependent on protein kinase R (PKR), but independent of IFN-gamma. These data define a new role for TLR in MSC immunobiology, which is to augment the immunosuppressive properties of MSC in the absence of IFN-gamma rather than inducing proinflammatory immune response pathways. PKR and IFN-beta play a central, previously unidentified role in orchestrating the production of immunosuppressive kynurenines by MSC.