Hemorrhagic shock (HS) and trauma is currently the leading cause of death in young adults worldwide. Morbidity and mortality after HS and trauma is often the result of multi-organ failure such as acute lung injury (ALI) and acute respiratory distress syndrome (ARDS), conditions with few therapeutic options. Bone marrow derived mesenchymal stem cells (MSCs) are a multipotent stem cell population that has shown therapeutic promise in numerous pre-clinical and clinical models of disease. In this paper, in vitro studies with pulmonary endothelial cells (PECs) reveal that conditioned media (CM) from MSCs and MSC-PEC co-cultures inhibits PEC permeability by preserving adherens junctions (VE-cadherin and β-catenin). Leukocyte adhesion and adhesion molecule expression (VCAM-1 and ICAM-1) are inhibited in PECs treated with CM from MSC-PEC co-cultures. Further support for the modulatory effects of MSCs on pulmonary endothelial function and inflammation is demonstrated in our in vivo studies on HS in the rat. In a rat "fixed volume" model of mild HS, we show that MSCs administered IV potently inhibit systemic levels of inflammatory cytokines and chemokines in the serum of treated animals. In vivo MSCs also inhibit pulmonary endothelial permeability and lung edema with concurrent preservation of the vascular endothelial barrier proteins: VE-cadherin, Claudin-1, and Occludin-1. Leukocyte infiltrates (CD68 and MPO positive cells) are also decreased in lungs with MSC treatment. Taken together, these data suggest that MSCs, acting directly and through soluble factors, are potent stabilizers of the vascular endothelium and inflammation. These data are the first to demonstrate the therapeutic potential of MSCs in HS and have implications for the potential use of MSCs as a cellular therapy in HS-induced lung injury.