Various studies analyzed the inhibitory effect exerted by mesenchymal stem cells (MSCs) on cells of the innate or acquired immunity. Myeloid dendritic cells (DCs) are also susceptible to such inhibition. In this study, we show that MSCs strongly inhibit DC generation from peripheral blood monocytes. In the presence of MSCs, monocytes supplemented with granulocyte-macrophage colony-stimulating factor (GM-CSF) and interleukin-4 (IL-4) did not acquire the surface phenotype typical of immature (CD14(-), CD1a(+)) or mature (CD80(+), CD86(+), CD83(+)) DCs, failed to produce IL-12, and did not induce T-cell activation or proliferation. Analysis of the molecular mechanism(s) responsible for the inhibitory effect revealed a major role of prostaglandin E(2) (PGE(2)). Thus, addition of the PGE(2) inhibitor NS-398 restored DC differentiation and function. Moreover, PGE(2) directly added to cultures of monocytes blocked their differentiation toward DCs in a manner similar to MSCs. Although IL-6 has been proposed to play a role in MSC-mediated inhibition of DC differentiation, our data indicate that PGE(2) and not IL-6 represents the key inhibitory mediator. Indeed, NS-398 inhibited PGE(2) production and restored DC differentiation with no effect on IL-6 production. These data emphasize the role of MSCs in inhibiting early DC maturation and identifying the molecular mechanisms responsible for the inhibitory effect.